Home buyers holding off as interest rate hikes means mortgages get them less
BILLERICA - Get ready to pay more for your credit card balance and your adjustable home loan. The nation's central bank raised interest rates yet again to try to curb inflation, while preventing a recession.
The Federal Reserve hiked interest rates by .75% for the second time in just months. The rate hike is affecting the housing market.
An online search of houses in Middlesex County reveals prices from $500,000 to more than $1,000,000 a home. It's these high prices that the Federal Reserve is trying to curb by raising the federal interest rate for the fourth time this year.
"When I hear that the Fed has raised the rate, it makes me feel like somebody has punched me in the stomach," said Billerica realtor Curtis Knight.
Knight says in the last six months, he's seen buyers shy away from their home searches because of rising mortgage rates.
"Up until December when the rates were 3.1, it was the wild wild West. The phone rang off the hook every day. Now it's very, very, different. Hardly any calls," Knight said.
Realtor Kevin Vitali says so far, the price of a home has not dropped by much.
"There's a lot of buyers hanging back like hoping the market is going to drop or fall," Vitali said. "There is not enough data to know what's going to happen two, three, four months from now, but the market is in transition and there's no question about it, and obviously the interest rates have something to do with that."
Vitali also sees buyers questioning whether now is the time, since every interest rate hike means their mortgage buys them less.
"If they were looking for $600,000 house in January, today they be looking for a $475,000 house if they're trying to maintain the same mortgage payment," Vitali said.