Fed Boosts Rates Yet Again, Pushing Down Home Affordability

The Federal Reserve continued to shout from the rooftops Wednesday that it will do what it takes to get inflation under control. The central bank raised the overnight federal funds rate by 0.75 percentage point, an action that will raise the floor under other interest rates. By making it more expensive to borrow money, the Fed intends to reduce demand for goods and services, which, in turn, is supposed to slow the rate at which prices go up.

The housing market has been hearing the Fed’s message loud and clear for months. Mortgage rates have skyrocketed (and might go up even more), home sales have slowed, prices aren’t rising as fast as they once were, and it’s getting more expensive to borrow for a home equity line of credit.

Mortgage rates have climbed all year

Starting in March, the Fed has raised the federal funds rate three percentage points to bring inflation under control. It’s the most aggressive rate-hike campaign in decades, because the inflation rate has been at its…

Continue Reading →

This article was written by Holden Lewis and originally published on www.nerdwallet.com