Mortgage rates are soaring to levels not seen in nearly four years, and if they keep rising this quickly, we may see homes soon become out of reach for millions of families.
The 30-year fixed-rate mortgages have risen even higher, to 4.72 percent. Just last year, they were just under half that. That’s a one percentage growth over the last month alone. Not to mention that, at its current rate, it could reach 5 percent in just a short amount of time—the highest it’s been in decades.
With inflation at a 40 year high and the Federal Reserve signaling multiple rate hikes around the corner, how much longer can the red hot real estate market stay hot, or even warm, for that matter.
Blake Harbin, CEO of mortgage lender Houzzle Financial, is joining us to shed light on this subject.
Q&A:
- Blake, what was the mortgage rate low recently, where are the rates today, and where may we expect them to be in the weeks and months ahead?
- Should families seeking a new home take a wait-and-watch approach, or should they grab a mortgage while they still can?
- What is the long-term mortgage climate looking like?
- How much difference does each percentage point make over the course of a 29-year mortgage loan?
5. The Wall Street Journal just reported that retail sales grew by 3.8% in January as inflation surged to a 40-year high of 7.5%, citing a February 16 Commerce Department report. Is 7.5% an accurate number?
Answer: No. that’s a political number. Real-world inflation is already in double digits because the government under-reports little things, like gas and groceries, the very things we need and buy in real life. These cascading effects will substantially curtail home buying for Americans. Instead of bringing the proverbial bacon home, literal bacon costs you an extra 18.6% higher. It will continue to add to the American families’ struggles who will find it most costly to put food on the family’s tables. This is a road that can even lead to hyperinflation.
6. Mortgage rates are closely tied to the Federal Reserve. So when should we expect to see the Federal Reserve interest rates increase in 2022, and by how much?
Answer: The only way to curb inflation and slow rising prices is by increasing interest rates. The Federal Reserve knows this, but it also knows that increased rates are counterproductive to economic growth. But instead of seeing a quarter-point bump or a rise of even half a percent, I think we’re looking at a whole percentage point. But this will barely scratch the surface in slowing down inflation. Unfortunately, it will be one of many quick interest rate hikes. We could be looking at all-time record-high hikes.
7. What’s the highest the Federal Reserve has raised interest rates in the past?
Answer 20% in 1980, which was to fight double-digit inflation. That was the last year of President Jimmy Carter’s Term. Heaven knows how much worse it might have gotten had Ronald Reagan not been elected to help turn things around?
8. With the likely incredible rising interest rates, could we see a recession shortly?
Answer: Yes. We can expect a recession. Compounding things, we still have a supply chain problem. So does Canada, due to the trucker blockade. In a free market, you need goods and services moving freely. Hopefully, we’ll see shipping normalize soon.
Blake Harbin is the CEO of Houzzle Financial, a mortgage lending company in the Southeast. He has been a small business owner for more than two decades and is an expert in the real estate industry. Blake is running as a candidate for Georgia’s 6th congressional district in 2022.
CONTACT: To schedule an interview with Blake Harbin, contact Celinda Hawkins at (432) 349 – 2736 jerry.specialguests@gmail.com or Tamara Colbert at 626-244-5571 tamara@ohsweetliberty.com
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