Fed’s 75-basis-point rate hike means millions more homebuyers will be priced out of the housing market: ‘Desperate times call for desperate measures’
On Wednesday, the U.S. Federal Reserve raised the benchmark interest rate by 75 basis points to a 1.5% to 1.75% range, the biggest increase since 1994 as it tries to tame rising inflation, which has reached a 40-year high.On Wednesday, the U.S. Federal Reserve raised the benchmark interest rate by 75 basis points to a 1.5% to 1.75% range, the biggest increase since 1994 as it tries to tame rising inflation, which has reached a 40-year high.
The 30-year fixed-rate mortgage averaged 5.78% for the week ending June 16, up 55 basis points from the previous week, Freddie Mac said on Thursday. That was the biggest one-week increase since 1987, said Sam Khater, Freddie Mac’s chief economist. Rates won’t have reason to fall with inflation at these levels, Lewis added. “Mortgage rates tend to go up and down in anticipation of Fed rate moves,” he said, adding that he doesn’t expect another dramatic spike in the weeks ahead.
Rising rates aren’t all bad news, he added. “Less demand for housing could help to alleviate some of the housing supply crunches that are being felt across the country. Though it’s unlikely that home prices will majorly slump, an increase in housing supply will likely significantly slow home price growth and give would-be buyers more housing options to chose from.”
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