The past two Fed interest rate hikes have been simultaneously shocking and not shocking. Shocking because they were both large — 0.75; not shocking because there was plenty of talk leading up to the Fed meeting about the need to do something drastic to combat inflation.
While recent news suggests inflation is slowing down, it does not mean that “normal” prices will return. Which begs the question, how does this all affect real estate?
First, Fed rate increases do not necessarily correlate 1-to-1 with mortgage interest rates, most of the time, an increase in the Fed rate leads to an increase in mortgage rates. Thus, those looking to buy often watch for any upcoming Fed hikes to better time their purchase.
So far this year, we have seen four rate hikes. Remember, we started the year at zero because the Fed was trying to stimulate the economy following the previous recession during the start of Covid.
This sent mortgage rates up after two years of record lows. Now with inflation subsiding a bit, potential homebuyers may be wondering if the Fed rate (and thus mortgage interest rates) will go down.