The Fed says as many as 6 rate hikes this year:
The Federal Reserve Chairman (Fed Chair) J. Powell, announced earlier in March that he was launching a ‘high-risk’ effort to tame the worst inflation since the 1980’s. Backing his word, he raised the key rate by a quarter of a point. The first rate hike in 3 years. This sent mortgage interest rates up, sharply.
From January 2021 to October 2021 the average 30 year fixed rate mortgage was about 2.95%. Today, March 30, 2022 the average rate is 4.65%.
So, how does a .25% point increase in the Federal Funds Rate cause a 1.70 % increase in mortgage rates? Speculation against and protection from future rate hikes that’s how. The banks and mortgage companies don’t wait for the Federal Reserve to increase their rates, they are proactive (in their mind) and get ahead of the game. Plus, when the Federal Reserve Chair ‘says’ he plans on several more rate hikes (not yet implemented), the banks/loan companies raise their rates in anticipation of them going up. There may be several rate hikes built into the rates we have today. And another thing, we do have to tame inflation AND there is the uncertainty of the geo-political fallout from the Russian invasion of Ukraine.
Still…. We have a housing shortage. The home prices are likely to continue to go up. We need more new housing now but, the home builders are a bit skittish… for 2 reasons… 1). Higher interest rates constrict home buyers and 2). Inflation… higher fuel costs, labor and materials. All of these are on the minds or our home builders.
Every market is different. New strategies for new times. If you know of someone thinking about buying or selling, please send them my way and I (and my team) will take EXCELLENT care of them (and/or you). I’m never too busy for your referrals.
I wish you all the best. Take care and be safe out there.
Bonus… Ron’s favorite Flowering Trees: Purple Leaf Plum, Magnolia, Mimosa/Japanese Silk Tree and Bottlebrush. My All Time Favorite (not on the list) is the Jacaranda (beautiful light blueish-purple flowers), but I think the weather is too harsh for this Beautiful Tree to survive in the Antelope Valley.
Sincerely
Ron Hier
Beware of ads that claim “I/We want to buy your house”.
They claim tthat there is no commission, no closing cost and no repairs. They Take it ‘As Is’. What they don’t tell you is that their offer is 30-40 percent below the average resale market. For instance, a home owner has been in their home for 30 plus years, The mortgage is paid, and they own the home free and clear. They bouth their homr in the 1980’s for $87,000.00 (which was a lot of money back then). The home owner gets a call or responds to an ad and the company says they’ll give you a cash offer and close in 7 days (if you like, and you can stay for free for a month… until you move). This might sound appealing up front, but an unsuspecting home owner may not know the ‘market value’ of their home and may trust whomever they are talking to. The purchasing party knows the market, how much it is going to take to fix/rehab the home and what it will sell for on the open market.
Farmers Amanac 2022
