As one of the last actions of the outgoing Fed Chairman, Janet Yellen announced another .25 percent increase in the Fed Fund rate. This continues to signal a strengthening economy, with future rate increases likely as the economy remains strong. What does that mean for home buyers? A .25 percent increase in the 30-year mortgage rate means a rise in your monthly payment of 3.5%. If two more increases occur in 2018, that would be a 7% rise in payments assuming no growth in home prices. Interest rate increases will be a growing factor affecting home affordability. Even with the announcement, rates remain very low compared to historical levels. Once locked in (using a fixed rate), you can protect yourself against future increases.