Mortgage rates are at a high of 6.7% in September and it is not expected to slow down just yet. We are currently seeing daunting inflation within the economy due to the repercussions of COVID-19. When covid hit many people lost their jobs or were fired to eventually be re hired down the road. However, in-between the time of jobless ness we saw an increase in government spending on unemployment insurance, and an increase in stimulus packages. This was a necessary action at the time but are seeing the effects of inflation as a result.
To combat this high inflation the fed have slowly been raising interest rates month after month in order to decrease consumer spending, to see demand fall. With the increase in interest rates we have now seen another drop in the market within recent weeks as the Dow Jones fell 1.5 % or to be specific it dropped roughly 450 points. The Nasdaq has also fallen but at a higher rate than the Dow Jones at 2.8%. These market crashes are directly related to the interest rate produced by the federal reserve. It is assumed by economist that when interest rates rise people take their money invested from stocks and put it into government bonds as it is a much safer return when in times of uncertainty. Which is what is occurring.
With an increase in interest rates by the fed, mortgage rates follow. As mentioned mortgage rates are at a high of 6.7% since 2007 and is a up about 3.69% from just over a year ago in September of 2021. This is ridiculous for people who are looking to become home owners and it is unfortunate to say that it might not be over just yet. Interest rates were raised .75% in the month of September alone and it is expected to rise around two more times before the end of 2022. Until we see Interest rates lower in the economy we wont expect mortgage rates to see a fall yet either. Lastly, we can expect the market to continue to slow down week after week as people take there money into government bonds.
https://www.washingtonpost.com/business/2022/09/29/mortgage-rates-fed/
- Ryan Stefancin
I wrote about something similar. I spoke on interest rates and the effect they had on the housing market. Let's hope the fed can put pressure on the economy to over time lower rates, wages and in turn mortgage rates
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