The second of three interest rate hikes that are slated for this year was voted for on Wednesday by the Federal Reserve. Rates are going to rise one-quarter percentage point. The committee decided to raise the target range for the federal fund rate to 1 to 1.25 percent.
The key rate is not directly tied to mortgage rates, exerts influence in housing. A recent survey was completed by current homeowners and prospective buyers. The results show that first time home buyers are disheartened by the rising rates. Other results show that 68% reported pressured feelings about buying a home ahead of future growth, as we know rates are going to rise again.
Ruban Gonzalez, economist states “We expect mortgage rates will remain above the previous years through the summer as the Federal Reserve continues to tighten monetary policy. While the increase in rates by the Fed has been well anticipated given the progress seen in unemployment, low inflation and wage growth are still a concern, and we anticipate they will move forward cautiously in the second half of the year given the asymmetric nature of policy available to counteract an economic slowdown versus a nascent acceleration in inflation.”