Currently Reading

How the Fed’s Most Recent Interest Rate Hike Impacts Homebuyers

Advertisement
Market Data + Trends

How the Fed’s Most Recent Interest Rate Hike Impacts Homebuyers

Higher rates are pricing out a large share of homebuyers and easing competition for those who can still afford home purchases


June 20, 2022
Person holding up home with percentage on price tag
Image: Stock.adobe.com

The Federal Reserve announced on Wednesday its largest rate increase since 1994 as another wave of lockdowns in China and an intensifying war in Ukraine put upward pressure on inflation and created additional supply chain disruptions. The average 30-year fixed-rate mortgage rose 55 basis points from 5.23% to 5.78% during the week ending Thursday, June 16, and more rate hikes are expected in close succession, Forbes reports.

While costly for borrowers, higher interest rates could provide long-awaited relief for buyers who can still afford to purchase a home by thwarting demand and slowing home price growth over the coming months. However, as builders pull back on new construction projects to adjust to a dip in buyer demand, housing shortages will likely hurt low- and moderate-income families entirely priced out of home purchases.

[Lending Tree senior economist Jacob] Channel said it’s possible that the rate increase could be somewhat of an over correction on the part of lenders, and as a result, it may fall somewhat over the coming weeks as lenders adjust to the current high-inflation environment. 

“With that said, mortgage rates have already risen considerably higher and faster than what most predicted they would at the start of the year – and, as evidenced by today’s latest figures, lenders have shown willingness to continue to raise rates even as home buyer demand falls,” he said. “Therefore, while we may see some ebbing and flowing of rates over the coming weeks and months, it’s possible that rates will still end up higher than they are today by year’s end.”

Read more

Related Stories

Housing Markets

Miami Tops the List of the Nation’s Most Competitive Rental Markets

Remote workers from around the country are flocking to sunny metros like Miami, where rental demand is at an all-time high

Market Data + Trends

Investors Are Flipping Houses at a Faster Pace, but Profits Are Falling

Shrinking supply and elevated costs posed challenges for investors flipping houses at the start of 2022

Market Data + Trends

Rising Real Estate Listings Signal Strong Post-Pandemic Recovery for the Housing Market

As demand softens, a resurgence of home listings sets the stage for the housing market's post-pandemic rebalancing 

Advertisement
Advertisement

More in Category




Advertisement
Advertisement

Create an account

By creating an account, you agree to Pro Builder's terms of service and privacy policy.


Daily Feed Newsletter

Get Pro Builder in your inbox

Each day, Pro Builder's editors assemble the latest breaking industry news, hottest trends, and most relevant research, delivered to your inbox.

Save the stories you care about

Lorem ipsum dolor sit amet lorem ipsum dolor sit amet lorem ipsum dolor sit amet.

The bookmark icon allows you to save any story to your account to read it later
Tap it once to save, and tap it again to unsave

It looks like you’re using an ad-blocker!

Pro Builder is an advertisting supported site and we noticed you have ad-blocking enabled in your browser. There are two ways you can keep reading:

Disable your ad-blocker
Disable now
Subscribe to Pro Builder
Subscribe
Already a member? Sign in
Become a Member

Subscribe to Pro Builder for unlimited access

Lorem ipsum dolor sit amet, consectetur adipisicing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua.