The Chairman of the Federal Reserve, Jerome Powell, has signaled a potential end to a series of rate hikes, after once again raising the interest rate by .25%. As a result, the real estate market was invigorated, with mortgage demand increasing by 5% over the course of a week. However, people remain cautiously optimistic, as future rate hikes may be necessary to further slow inflation.
A Potential End to Interest Rate Hikes
The Federal Reserve, also commonly referred to as the Fed, has been gradually increasing interest rates over the past year to deal with high inflation. The most recent interest rate hike increased rates by .25%, which would normally be a substantial increase that could cool the market. However, Chairman Powell suggested that there would be no more rate hikes for at least a little while, which helped to invigorate the market.
The Impact on the Real Estate Market
As a result of this signal, the amount of demand for mortgages increased by 5% during the first week of May. The rate of applications for refinancing was even higher, increasing by 10% during the same period. Interest rates for 30-year fixed rate mortgages with conforming balances even dropped slightly during that period, dropping from 6.50% to 6.48%, which is still nearly a full percentage point higher than it was at the same time last year.
Tentative Optimism for a Rebound
This news has left some people optimistic that the real estate market may rebound after several months of declines in home prices. High interest rates have helped to keep demand down, which has been further hindered by a lack of inventory available for purchase. If interest rates stop going up, or even begin to decline, it may encourage more people to start buying homes once more.
What This May Mean For You
If you are a prospective buyer, the notion of paying lower interest rates is favorable, especially with rate hikes potentially coming to an end. Sellers can also benefit from this situation, as it can stimulate demand for more homes, bringing in higher bids. The sooner you get into the market, the more easily you will be able to take advantage of any opportunities that may present themselves due to falling interest rates.
At Liongate Homebuyers, we assist our clients with a variety of services related to buying and selling real estate, including purchasing homes for cash. We have experience handling real estate financing, especially for developers and house flippers. If you are interested in selling your home for cash, please contact us at 516-548-6553, or visit our contact page.
