HUNTSVILLE, Ala. (WHNT) — The Federal Reserve is taking another shot at fighting inflation by raising interest rates — again.
It’s designed to slow down the economy and ease rising prices, but it’s also pushing up loan costs and that includes interest for mortgage rates and buying homes.
First-time homebuyer Matthew Glines started saving and searching to buy last year after he says his rent went up more than 10 percent in one year. But Glines says as rates continue to go up, so does the stress of buying.
“Just kind of running the numbers and oh with current rates,” Glines stated. “And this was a few months ago. So it would have been when it was four percent but still climbing. We were like ‘oh yeah we can totally do this. No problem. We will just save up and we will be golden and then as rates have gone up.’ It’s like maybe it’s a little tighter.”
The Federal Reserve is raising interest rates to slow inflation — also making it more expensive to borrow money. That includes financing a new home.
“It will affect their ability to purchase,” said Isaac Winkles, a local realtor. “So their price point may have to come down just a little bit.”
Even though the Federal Reserve doesn’t directly set fixed mortgage rates, they continue to soar. A 30-year mortgage rate is just over 6%, more than double from a year ago.
“And we’re really stressed as the numbers started to get higher and higher and higher and it’s just been kind of a constant looking at the mortgage rates every single day like ‘okay are they going to go down today? Are they going to go up? Are they staying the same?” says Glines.
Wednesday the feds raised the rate three quarters of a percentage point… the fifth hike this year. But real estate experts say it shouldn’t cause fear.
“Remember when interest rates were 17, 18, 19, 20, 21 percent so a 6% interest rate is still really a normal interest rate,” says Isaac Winkles.
The Federal Reserve is expected to raise rates two more times this year. The next hike could come in November.