Day 1 under the Fed’s new interest rate policy was uneventful

“The Fed has to be patting themselves on the back given what’s happened in markets”, said Andrew Szczurowski, portfolio manager at Eaton Vance, in Boston.

The short answer is yes, since the Fed’s rate increase does have an impact on the terms of mortgages. For example, global turmoil can prompt foreign investors seeking safety to pour money into US Treasuries, which raises the price but pushes rates down. With that in mind, the rate increases we’re likely to see in 2016 are nothing to fret over. In the event of volatility, Hong Kong has been well-served by cooling measures since 2009 to safeguard the financial sector from a property market correction, which have resulted in residential loan-to-value ratios averaging more than 50 per cent. That said, the Fed’s decision has a brighter side. If you don’t need the ongoing availability of your equity reserves, you could lock in a final equity draw with a conversion to a fixed-interest loan at current low rates.

While a 0.25 percent increase is tiny, some analysts think the Fed might raise rates two or three times next year – 0.25 percent each time, to 0.75 percent or 1 percent.

The Fed sets the federal funds rate, which is the interest rate at which a depository institution lends funds maintained at the Federal Reserve to another depository institution overnight. In addition, banks are awash in deposits, and, for the time being, don’t need to offer higher savings rates to attract more.

This, in theory, yields a new Effective Fed Funds rate – which had been right around 0.13% over the last seven years – of roughly 0.38%, give or take.

Locally, rates are a hair lower, at 3.89 percent at Third Federal and 3.88 percent at Dollar Bank and Huntington.

It’s been so long since the Federal Reserve raised interest rates, many people have forgotten that their credit card interest rate is probably tied to the prime rate. The Fed policymakers coupled the hike with a signal that further increases likely will be made slowly, as the economy strengthens further and inflation rises from undesirably low levels. Particularly challenged will be homeowners who have adjustable rates and stand to face higher mortgage payments. “Even if you have marginal credit, it’s not going to be a problem”.

Many analysts expect the Fed to gradually raise its short-term rate by a total of 1 percentage point by the end of 2016.

As mortgage rates creep higher, first-time homebuyers may have to lower their target home price.

Mortgage buyer Freddie Mac says the average rate on a 30-year fixed-rate mortgage edged up to 3.97 percent from 3.95 percent a week earlier.

Bankrate’s national weekly mortgage survey is conducted each Wednesday from data provided by the top 10 banks and thrifts in 10 top markets.

“Personally, I’m refinancing myself to capture the lower rate”, says real estate broker Stone.

Gary Tice, chairman and CEO of First Florida Integrity Bank in Naples, said new loans coming from the bank will be affected immediately by the new Fed rate, but not in a big way. They influence everything from mortgage rates to savings rates. “If you can get 4 percent on a mortgage, that’s remarkable”. Auto-loan costs may rise as well, economists said, though not as fast as the short-term rate the Fed controls.