New Federal Reserve Chair Janet Yellen made her first official briefing and laid out a bit more information than the consumer is generally used to with regard to “Fed speak.” What does that mean for real estate investors who are in the process of building new rental properties both in the near andfed raises rates long term?

The Federal Reserve’s “quantitative easing” program has been around in some format for a few years now and as recently as last November had the Fed making $85 billion in monthly purchases of mortgage bonds and Treasuries. Earlier, the Fed announced a gradual pullback of the program, dubbed “tapering” that would soon pull the plug on the purchases altogether.

When the Fed makes these buys, it keeps the demand for bond and Treasury issuances relatively high, keeping rates down. Tapering reduces the monthly purchase amount by $10 billion and today the Fed buys $55 billion per month. At this rate, the program will cease entirely by this fall.

For real estate investors taking out construction loans, this announcement will have little, if any affect for the short term. Short term rates should still be in their relative range into next year and if there is any increase it should be a marginal one. Longer term however, permanent mortgage rates are likely to begin a gradual increase this fall once the program ends as there will be fewer buyers in the bond and Treasury markets. To the real estate investor who is selling a newly constructed home higher rates mean fewer buyers will be able to qualify, yet don’t expect much of a difference compared to the current environment. Fixed rates may pop closer to 5.00 percent but from an historical perspective that’s still very, very low.

Yet don’t let that surprise you. Rates could be on the move as soon as late fall for a traditional mortgage but understand the change should be marginal. At least into next year. After that any further rate increases will be due to a recovering economy. And more jobs means more qualified buyers.