First rate hike in nearly 10 years at FOMC meeting is no surprise
The moment we've been waiting for years to come has finally arrived. And no, we're not just referring to the debut of "Star Wars: The Force Awakens Episode VII," which is coming to a theater near you Thursday night.
The Federal Open Market Committee voted this week to begin raising the central bank's interest rate by 0.25 percent, the first increase in nearly a decade. This move is a sign of confidence in the U.S. economy to weather higher interest rates, and it could also translate to bigger savings in your investment accounts accruing interest faster.
While news of this change could incite worry and even panic in borrowers and investors, there is little reason to be concerned. As mentioned previously, this increase has been anticipated for several years after a dormant period where rates were kept at 0 percent to stimulate growth and spending. The rate rise has been pushed back for the better part of the past year to wait until economic conditions were right.
Markets welcome news of rate increase
How did the markets react? Surprisingly, the stock markets seemed to warmly embrace the Fed's move after months of jitters as the Dow Jones industrial average ended the day up 224 points from Tuesday. Many economists had argued that prolonging a rate increase beyond the end of 2015 could have a negative effect. Fed officials have maintained that any further rate increases will come very gradually, not suddenly.
Meanwhile, new housing permits jumped to a five-month high in November, showing strength in the housing industry and backing the Fed's decision. Stay tuned here for updates on mortgage industry trends and other news impacting your home financing decisions.