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Why a rate hike is not bad news for the housing market

People interested in Maryland residential real estate transactions may be concerned about a possible interest rate hike by the Federal Reserve, a move that could occur as early as June. While conventional wisdom may lead people to believe that such an increase will be bad for the market, slowing sales and costing people more money due to rising prices, a rate hike may actually be good news.

Contrary to what some have said, the housing market is doing better than many claim. The foreclosure rate continues to decline and is now at a rate of only one out of every 1,295 mortgages. The housing market has surged as well, with sales rising by 24.8 percent between February 2014 and February 2015.

The Federal Reserve's move also points to the fact that the rest of the economy is doing better as well. With increasing job security and rising wages, the housing market will also benefit. The Federal Reserve is predicting that the rate of unemployment will decrease in 2015 to 5.2 percent, while Fannie Mae expects a 4.1 percent growth in disposable income. When Fannie Mae's and the Federal Reserve's forecasts are combined, it appears that rates will most likely settle around 4 percent with a likely 2015 increase in sales of 5.2 percent for the year.

People wanting to sell their homes or purchase property should not necessarily worry about the housing market's health. Those who want to get the best advantage in their real estate transaction may want to seek the help of a real estate attorney. Legal counsel can help their clients in reviewing sales agreements while negotiating terms best designed to protect their client's interests. They may also help with other aspects of the transaction, including title review and obtaining title insurance.

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