Last week, the Federal Reserve announced its largest interest rate hike since 1994 in an effort to slow inflation. Polunsky Beitel Green believes that many market participants will welcome the 75-basis-point rate increase. Although painful in the short term, it could hasten a return to stability in home mortgage interest rates. Until then, we can expect market volatility to continue in anticipation of further interest rate increases in the coming months.
The mortgage industry continues to turn to firm principal Marty Green for his views on how the Fed’s rate hike will impact home buyers. Marty’s commentary has been included in multiple media outlets over the past week, including:
- National Mortgage News: “Mortgage rates surge at fastest pace since 1987”
- Mortgage Professional America: “Fed rate hike pushes mortgage rates to highest level in over 13 years”
- Mortgage Network News: “The Interest | Can The Fed Reset The Housing Market? Mortgage Rates Spike”
- HousingWire: “How the Fed’s rate hike will affect the housing market”
- Insurance News Net: “Fed raises rates by .75 point, largest jump since 1994”
Additionally, in an informal poll of a handful of PBG’s residential mortgage lending clients, respondents were fairly evenly split between those predicting a 50-basis-point increase versus the higher 75-basis-point increase. More clients said they preferred the more aggressive rate hike the Fed ultimately adopted, with more than one respondent hoping for a full 100-basis-point increase.
“We expect the Fed to continue to move more quickly to get the federal funds rate up to the 3.5% to 4% range sooner rather than later,” Green said. “Many participants in the residential markets prefer enduring the short-term pain that the rate increases cause over the Fed moving more incrementally.”