Huntsville mortgage broker worried Fed’s rate hike Wednesday could lead to another recession | News
The Federal Reserve announced Wednesday that it was raising its key interest rate by three-quarters of a point, marking its largest hike in nearly three decades.
The move will increase its benchmark short-term rate, which affects many consumer and business loans, so what does that mean for anyone looking for a mortgage to buy a home?
Will Worthington with New South Mortgage said you better get locked into a rate now.
“When you start messing with the housing market, you are going to mess with the entire economy, and this is the biggest increase in 28 years,” Worthington said.
The move could put a damper on the super-hot Huntsville real estate market when more potential buyers are priced out of the market for a conventional mortgage.
The Central Bank is ramping up its drive to tighten credit and slow growth as inflation has reached a four-decade high of 8.6%, spreading to more areas of the economy and showing no sign of slowing. Worthington doesn’t think their move Wednesday is going to help.
“The difference in 200 basis points on a mortgage rate on $400,000 is about six or $700 a month, so it does make a big difference. I don’t understand what the Fed is thinking on this, because increasing the rate is not going to slow down this inflation that much. It is going to hurt the consumer even more, and it’s going to put us into a recession,” Worthington said.
Since January, conventional home mortgage rates have shot up several percentage points, and more increases are anticipated.
“It is creating a lot of confusion right now,” Worthington said.