To help the economy recover from the 2008 recession and housing bubble, the U.S Federal Reserve has maintained a loose monetary policy, holding interest rates at historic lows and providing easy access to credit.

Now with a strong economy, low unemployment and a nearly eight year bull market for stocks, the Fed’s policy is tightening. While the Fed’s monetary policy does not directly impact mortgage rates, an increase in interest rates does make borrowing more expensive for commercial banks, who then pass the increase on to consumers.

For years the fixed 30-year mortgage interest rate has been below 4%, but it quickly rose to around 4.5% in early 2018 with expectations that it will rise to 5% in the next year. It’s only a matter of time before rising rates seep into the housing market. According to Steamboat mortgage banker Kathryn Pedersen, of Fidelity Mortgage, “When mortgage interest rates rise it increases the monthly payment. Higher payments mean less affordability. That can certainly impact the decision and ability to purchase.” Will this lead to more potential buyers not being able to purchase in an already high priced market like Steamboat?