Federal Reserve again Raised benchmark interest rates this weekthe fourth consecutive increase of 75 basis points.
What does that mean for mortgage rates? It has already exceeded 7% for the first time in 20 years.?
maybe not much.
“The caveat in observing what the Federal Reserve is doing is that it doesn’t always translate directly into a one-to-one change in mortgage rates,” he says. Ali Wolf, chief economist at Zonda, a homebuilding data company. “Sometimes mortgage rates actually went down after the Fed meeting, mortgage interest rate Go up. “
The Fed has raised the Federal Funds Rate (the short-term interest rate that determines how banks borrow money from each other) by 75 basis points. Highest inflation since the 1980sExperts say the mortgage market has already “absorbed” the change and is likely rising in anticipation of it, so mortgage rates shouldn’t fluctuate wildly unexpectedly.
Past Federal Reserve rate hikes have provided frustratingly little guidance on what to expect.
“In recent months, the market has been amazingly surprised. [Federal Reserve Chairman] Jerome Powell comes out and says, ‘I’m going to raise interest rates by three-quarters of a percentage point.'” Jeff TuckerSenior Economist at Zillow.
Here’s what the experts are eyeing at this week’s Federal Reserve and what it means for homebuyers.
Fed signal more important than rate hike
The Fed’s rate hike in November wasn’t all that surprising. The big question, experts say, is whether this is the final 75 basis points increase for central banks. inflationwhich September: 8.2% YoYExperts say the Fed’s hawkishness — how committed it is to aggressive rate hikes — will determine what the market expects in the future.
At a press conference on Wednesday, Powell suggested the current aggressive trajectory would continue for at least some time, saying, “It’s too early to discuss a moratorium. That’s not what we’re thinking.” , it can be expected that mortgage rates will not be dramatically affected.
Conversely, had Powell predicted a slowdown in rate hikes, the shock to the financial system would have been greater, Wolff says.
What the Federal Reserve Means for Home Buyers
Your decision to buy a home should be based much more on your own financial situation than on the statements of Washington’s central bankers. interest rate rise When house prices still highthere are a few things to consider when making that decision.
see monthly payments
if you can can afford monthly payments If you stay home and want a home, ask for it, says Tucker. Regardless of the interest rate, your monthly payments should fit your budget.
“The question I ask myself is can I afford this home or is it at least the right one to meet my and my family’s needs for the next few years, and ideally for the next few years?” says Tucker.
Secure a rate you can afford
The day-to-day movement of mortgage interest rates is of little importance to individual homebuyers. So lock what you can afford when you get the chance. because it can go up.
“When you find a home you like, you should definitely pull the trigger,” he says. Joe Allenis a Senior Mortgage Lending Officer at Quontic Bank, an online community development financial institution.
Dive in when you find a deal
house prices are started to fall, but they don’t drop forever. How far down and how long it stays there will partly depend on the market, experts say.
“There’s a balance between patience and paralysis, and you have to make sure you’re ready to act when you see the right opportunity,” he says. Erin Sykes, chief economist at real estate firm Nest Seekers International. “These setbacks usually don’t last very long. Get ready to select an agent and take action.