https://www.cnn.com/2023/07/08/busin...ces/index.html
"Why isn’t the housing market behaving the way it’s supposed to?"
"Why did mortgage rates stop responding to Fed hikes?"
As I always have said, take the media with a grain of salt. Yet another article that will confuse and possibly mislead potential home buyers.
The Federal Reserve rate hikes DO NOT directly affect mortgage rates. When the Feds raise rates, this is mostly affects personal loans, credit cards, auto loan rates, etc. There are several factors that affect mortgage rates, and while the Federal Reserve rate hikes may INDIRECTLY affect mortgage rates, the biggest driver of mortgage rates is inflation. As inflation goes up, so does mortgage rates and vice versa.
Simple economics of supply/demand. While mortgages rates going up should theoretically drive pricing down, this simply is NOT happening because of the lack of supply. Ever since the housing crash in the late 2000's, alot of homebuilders have gone defunct and those that were fortunate enough to survive have built cautiously and nowhere enough to meet the demands of today (15 years of underbuilding, while households have grown since and with Millennials/Gen Z reaching the age of homeownership).
You will also hear the media say prices are starting to cool down, BUT keep in mind on the home prices before/during/after COVID. When rates dropped during COVID, home prices AND values skyrocketed. So while prices may have come down, they are still above what they were pre-COVID.
For those that are looking to buying a home, make sure you shop around lenders and really test your Loan Originator by asking them questions to ensure they know what the h3ll they are doing and what they are talking about.