Fifth interest rate hike in 2022 has homebuyers worried

HUNTSVILLE, Ala. (WHNT) – The Federal Reserve is again trying to fight inflation by raising interest rates – again.

It’s designed to slow the economy and dampen rising prices, but it also pushes up the costs of loans, including interest on mortgage rates and buying homes.

First-time home buyer Matthew Glines started saving and looking to buy last year after he said his rent had risen more than 10% in a year. But Glines says rates continue to rise, and so does the stress of buying.

“Just sort of crunching the numbers and oh with the current rates,” Glines said. “And that was a few months ago. It would have been that way when it was four percent but still climbing. We were like ‘oh yeah, we totally can do this. No problem. We will just save and be golden then as rates go up. It’s like maybe it’s a little tighter.

The Federal Reserve raises interest rates to slow inflation, which also makes it more expensive to borrow money. This includes financing a new home.

“It will affect their ability to buy,” said Isaac Winkles, a local real estate agent. “So their price may have to come down a bit.”

Even though the Federal Reserve does not directly set fixed mortgage rates, they continue to skyrocket. A 30-year mortgage rate is just over 6%, more than double what it was a year ago.

“And we’re really stressed as the numbers started going up more and more and it’s just been kind of a constant watching mortgage rates every day like ‘ok are they going to go down today? Will they go up? Do they stay the same? said Glines.

On Wednesday, federal authorities raised the rate by three-quarters of a percentage point… the fifth hike this year. But property experts say that shouldn’t be scary.

“Remember when interest rates were 17, 18, 19, 20, 21%, so a 6% interest rate is still a normal interest rate,” says Isaac Winkles.

The Federal Reserve is expected to raise rates two more times this year. The next hike could be in November.