The Federal Reserve is raising mortgage rates in North Carolina, a move that is expected to drive potential home buyers out of the market and instead wait for more favorable mortgage conditions.
Eric Finnigan, a director at John Burns Real Estate Consulting, said that the rise in mortgage rates could rule out 18 million households from qualifying for a $400,000 mortgage, Market Watch reported.
The hike is the latest attempt by the Fed to curb inflation and cool the economy. The hike represents a 13-year high for mortgage rates and it is rising at the fastest weekly pace in the last 35 years. Mortgage rates are now nearing 6% in North Carolina, according to Bankrate.com.
Orla Goldfarb, a reporter at The Wall Street Journal, warned about the consequences of the move, saying, “The surge marks the largest weekly increase since 1987. It stands to add to the pressure on U.S. home prices, which remain strong despite rising rates and tumbling affordability.”
Across the nation, mortgage giant Freddie Mac reported an average mortgage rate of 5.23%. In addition to rising interest rates, the consumer-price index has risen to 8.6%, which is another 40-year high growth rate, according to the Bureau of Labor Statistics.
Some experts are concerned that the move could drive the U.S. economy into recession, but the move is unprecedented and the consequences are not yet known, The Wall Street Journal reported.
Consumers are certainly feeling the sting of rising interest rates. Last month, according to the Journal, home buyers paid an average of $740 more per month to finance a median-priced U.S. home than they would have in May of 2021, when prices dipped as low as 3%.
According to experts, the recent increases in mortgage rates seem unlikely to reverse anytime in the near future.
