{"id":1947,"date":"2023-03-24T04:34:25","date_gmt":"2023-03-24T04:34:25","guid":{"rendered":"http:\/\/billingsrealtybrokers.paradiseinnovations.com\/index.php\/2023\/03\/24\/the-fed-just-raised-interest-rates-again-heres-why-thats-bad-news-for-both-homebuyers-and-sellers\/"},"modified":"2023-03-24T04:34:25","modified_gmt":"2023-03-24T04:34:25","slug":"the-fed-just-raised-interest-rates-again-heres-why-thats-bad-news-for-both-homebuyers-and-sellers","status":"publish","type":"post","link":"http:\/\/billingsrealtybrokers.paradiseinnovations.com\/index.php\/2023\/03\/24\/the-fed-just-raised-interest-rates-again-heres-why-thats-bad-news-for-both-homebuyers-and-sellers\/","title":{"rendered":"The Fed Just Raised Interest Rates Again\u2014Here\u2019s Why That\u2019s Bad News for Both Homebuyers and Sellers"},"content":{"rendered":"

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Kevin Dietsch\/Getty Images<\/p>\n

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The Federal Reserve\u2019s latest rate hike may be like a late frost creeping over the fragile spring housing market<\/a>.<\/p>\n

In the wake of the Fed increasing its rates by 0.25% on Wednesday afternoon, mortgage interest rates are expected to rise again. That\u2019s going to hurt buyers<\/a> grappling with still-high home prices, mortgage rates that are already nearing 7%, and a lack of properties for sale. Sellers will also share in the pain as there will be fewer buyers who can afford to jump into the fray and pay top dollar for their homes.<\/p>\n

The housing market had begun to thaw as mortgage rates had temporarily fallen to the low 6% range. But this expected rate increase could halt the momentum that had been building.<\/p>\n

\u201cWith home prices and mortgage rates already pushing the edge of the envelope for many shoppers\u2019 budgets, it\u2019s not surprising to see homebuyers respond when rates fluctuate,\u201d says Realtor.com\u00ae Chief Economist Danielle Hale<\/strong>. \u201cWhen rates rise, we see signs that buyers are pulling back, but when rates drop, homebuyers seem to jump back in the market.\u201d<\/p>\n

The Fed has been raising its rates<\/a> to tamp down on high inflation, which includes the sticker shock from grocery shoppers paying more than $5 for a dozen eggs and renters who have been contending with double-digit rent hikes<\/a>. While mortgage rates are separate from the Fed\u2019s short-term interest rate, they have been moving in the same direction: up.<\/p>\n

Mortgage rates had ticked up nationally to 6.7% by Wednesday afternoon in anticipation of the Fed\u2019s increase, according to Mortgage News Daily<\/a>. This was for 30-year, fixed-rate loans.<\/p>\n

Even small fluctuations in these figures can add up to big costs for homebuyers. A buyer who can borrow $375,000 at a 6% mortgage interest rate may be only able to get a loan for $338,000 at 7%. As a result, their monthly payments swell in size.<\/p>\n

Mortgage applications had just begun to tick up before the Fed news: Applications from homebuyers rose 17.5% in the week ending March 17 compared to four weeks earlier, according to the Mortgage Bankers Association. (However, applications were still down 36% from last year when the market was nearing its peak.)<\/p>\n

Sales of existing homes also surged, rising 14.5% in February from January. Some of this was seasonal; sales are generally slow in the dead of winter following the holidays, and pick up in the spring when buyers generally come out in full force. Annually, sales were down 22.4% from a year ago.<\/p>\n

\u201cWe are probably\u00a0going see a pick up in sales as folks go out and look at homes, absent more banking crises and absent rates skyrocketing,\u201d says Keith Gumbinger<\/strong>, a vice president at HSH.com<\/a>, a mortgage information website.<\/p>\n

He believes prices could even rise a little this spring as the competition for homes heats up.<\/p>\n

\u201c[But] I don\u2019t think we\u2019re going to be competitive with last year\u2019s numbers,\u201d he says.<\/p>\n

While it\u2019s probably little comfort to struggling buyers or sellers who had been hoping for a respite, the Fed\u2019s rate hike was originally expected to be even higher after the sudden collapses of Silicon Valley Bank and Signature Bank. That could have had a bigger impact on mortgage rates.<\/p>\n

And if the Fed hadn\u2019t raised rates this month, it would have raised alarms that it was worried about the health of the U.S. banking system. That could have set off other economic problems.<\/p>\n

\u201cThe Fed wants to be able to show that it is sensitive to inflation risks, but at the same time it\u2019s recognizing the stresses in the banking climate right now,\u201d Gumbinger says.<\/p>\n

The upside is that the Fed increase could help tame inflation quicker, \u201cwhich would mean lower mortgage rates in the long run,\u201d says Realtor.com\u2019s Hale.<\/p>\n

But getting to this point may not be possible without a recession. And if job losses begin to mount, that could scare away potential homebuyers<\/a>.<\/p>\n

\u201cThe long-term outlook for housing is better if the Fed controls inflation,\u201d\u00a0says\u00a0Aaron Brown<\/strong>, a Bloomberg columnist and adjunct finance professor at New York University. However, \u201cwe\u2019re not through with the pain yet.\u201d<\/p>\n

The post The Fed Just Raised Interest Rates Again\u2014Here\u2019s Why That\u2019s Bad News for Both Homebuyers and Sellers<\/a> appeared first on Real Estate News & Insights | realtor.com\u00ae<\/a>.<\/p>","protected":false},"excerpt":{"rendered":"

Kevin Dietsch\/Getty Images The Federal Reserve\u2019s latest rate hike may be like a late frost creeping over the fragile spring housing market. In the wake of the Fed increasing its rates by 0.25% on Wednesday afternoon, mortgage interest rates are expected to rise again. That\u2019s going to hurt buyers grappling with still-high home prices, mortgage…Read More→<\/a><\/p>\n","protected":false},"author":0,"featured_media":1948,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-1947","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uncategorized"],"_links":{"self":[{"href":"http:\/\/billingsrealtybrokers.paradiseinnovations.com\/index.php\/wp-json\/wp\/v2\/posts\/1947","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/billingsrealtybrokers.paradiseinnovations.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/billingsrealtybrokers.paradiseinnovations.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"http:\/\/billingsrealtybrokers.paradiseinnovations.com\/index.php\/wp-json\/wp\/v2\/comments?post=1947"}],"version-history":[{"count":0,"href":"http:\/\/billingsrealtybrokers.paradiseinnovations.com\/index.php\/wp-json\/wp\/v2\/posts\/1947\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"http:\/\/billingsrealtybrokers.paradiseinnovations.com\/index.php\/wp-json\/wp\/v2\/media\/1948"}],"wp:attachment":[{"href":"http:\/\/billingsrealtybrokers.paradiseinnovations.com\/index.php\/wp-json\/wp\/v2\/media?parent=1947"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/billingsrealtybrokers.paradiseinnovations.com\/index.php\/wp-json\/wp\/v2\/categories?post=1947"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/billingsrealtybrokers.paradiseinnovations.com\/index.php\/wp-json\/wp\/v2\/tags?post=1947"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}