Fed Chair's Call for Higher Interest Rates Sparks Surge in Mortgage Rates

Jerome Powell, the chair of the Federal Reserve, has suggested that higher interest rates might be needed to reduce inflation. This could affect mortgage interest rates, which have already risen and are causing homebuyers to pay over 50% more for their mortgages than they would have a year ago. As a result, people may not be able to afford to buy homes, and those who can will likely have to bid less than they would have in the past. The housing market may slow down as a result, but it is not expected to come to a halt. However, when the stock market is unstable, more investors tend to invest in mortgage bonds, which could bring rates back down.

Realtor.com's Chief Economist, Danielle Hale, expects mortgage rates to fluctuate between the high 6% to 7.5% range in the short term. While this might slow down the spring housing market, it is not expected to make it worse. Even though higher rates might delay the market's recovery, it will eventually gain momentum again. Sellers may need to be mindful of buyers' budget constraints, and fewer buyers may be in the market. However, the housing market is still expected to recover, and higher rates are not expected to stop it entirely.

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Source: https://www.realtor.com/news/trends/homebuyers-beware-the-fed-just-jammed-another-wrench-into-the-spring-housing-market/