It’s ironic that the cool weather and the rain came in right after the Fed announcement yesterday on Wednesday at noon when they announced that they were going to raise rates by another 75 basis points or 0.75%.
Now, if you’ve been watching my videos or studying this at all, you know that when the Fed raises rates that doesn’t necessarily mean that mortgage rates go up.
In fact, at first we saw rates improve a little bit yesterday, but then once everyone started to digest what the Fed was really saying in their policy statement, rates have gotten worse today, unfortunately, because what the Fed said in their forward guidance, where they’re trying to telegraph to the markets what they’re doing, is that they’re not going to slow down on hiking rates.
They’re telling the markets they’re going to keep hiking rates, they’re going to fight this inflation fight, and do everything they can to bring inflation down. The market’s interpreted this as the Fed losing control of the inflation fight. Inflation is the enemy of long term rates. Inflation causes long-term rates like mortgage rates to go up, and that’s in fact what we’re seeing happening today.
Now, if the Fed does lose control of inflation, or even if inflation stays where it is, this is why I’m doing the video in front of Safeway, we’re going to keep seeing food and energy prices go up, and that’s going to certainly affect the economy. More and more economists are talking about a recession happening. Remember also, a recession does not mean that housing prices necessarily go down. Housing has fared pretty well in most recessions, and we’re still in a low inventory environment.
By the way, there’s been headlines out there about 22% of houses experiencing price reductions right now, and that’s certainly true.
It’s probably happening. I wanted to share this statistic with you that in a normal market 20% of houses experience price reductions, so this is not too far off from a normal amount of price reductions or what’s considered a normal housing market.
So just keep in perspective what the media is saying out there. Call me if you want to look at what your payment might look like, what kind of home you can qualify for, and I’m happy to answer those questions for you. You can also text or email me. 303-670-01367 or email@example.com