If people had difficulty buying houses with low rate,

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amother

Sun, Jun 19 2022, 6:16 pm

Attention Finance mavens: What will they do now? Will they not buy until rates drop?

How are house seekers dealing with newly high interest rates?

Tia

amother

DarkYellow

Sun, Jun 19 2022, 6:28 pm

They're hoping interest rates will eventually go down and they'll be able to refinance.

amother

Watermelon

Sun, Jun 19 2022, 7:45 pm

amother [ DarkYellow ] wrote:

They're hoping interest rates will eventually go down and they'll be able to refinance.

usually prices come down a little when rates go up. But I agree it's a very rough time now, especially knowing that a yr ago rates were way way lower.

amother

Steelblue

Sun, Jun 19 2022, 7:47 pm

I think rates will stay here a few years. Go even higher.
I think prices will fall. Ppl don’t be willing to pay what they paid. 6 months ago. Mortgage of 2500 is 5000 I don’t believe ppl are still going to be paying those prices. I’d give it a few weeks.
You already see houses aren’t moving as fast.

NotInNJMommy

Sun, Jun 19 2022, 7:52 pm

That’s the point of the Fed raising rates: curb inflation by having folks less willing to take on debt with higher rates.

It can also prevent or minimize recession.

amother

Mistyrose

Sun, Jun 19 2022, 7:56 pm

It’s just really not fair to first time home buyers who have finally scraped together a down payment and now get crushed by the fed artificially raising rates. They should at least have a first time homeowner program for significantly lower rates.

amother

Sun, Jun 19 2022, 7:57 pm

Any finance mavens have a way around the current situation?

NotInNJMommy

Sun, Jun 19 2022, 7:57 pm

amother [ Mistyrose ] wrote:

They’d also get crushed by skyrocketing inflation.

There’s a bigger economic matter going on here and it’s critically important on a widespread level that inflation is curbed and recession minimized.

amother

Watermelon

Sun, Jun 19 2022, 8:02 pm

amother [ OP ] wrote:

Any finance mavens have a way around the current situation?

You can look into ARM loans or first time home buyer programs.

amother

Sand

Sun, Jun 19 2022, 8:03 pm

NotInNJMommy wrote:

That’s the point of the Fed raising rates: curb inflation by having folks less willing to take on debt with higher rates.

It can also prevent or minimize recession.

Isn't it possible for this to in fact create a recession?

amother

Snowdrop

Sun, Jun 19 2022, 8:04 pm

NotInNJMommy wrote:

There are many ways to do that, it can be fixed other ways

amother

Seafoam

Sun, Jun 19 2022, 8:10 pm

amother [ OP ] wrote:

Any finance mavens have a way around the current situation?

amother

Latte

Sun, Jun 19 2022, 8:11 pm

amother [ Seafoam ] wrote:

We've been down this road before....

shoshanim999

Sun, Jun 19 2022, 8:15 pm

NotInNJMommy wrote:

That’s the point of the Fed raising rates: curb inflation by having folks less willing to take on debt with higher rates.

It can also prevent or minimize recession.

I agree with half of what you said.

Higher rates will lower inflation because it will lessen demand as people won't be able to afford expensive housing at higher rates.

Higher rates will also contribute towards a recession for a few basic reasons.

1. Businesses will be reluctant to borrow, and expand (and hire) because it will be more expensive to do so. What's more is that unemployment will start ticking higher as businesses let go of workers no longer needed as demand lessens.

2. People and especially homeowners will be reluctant to borrow and spend money for the same reason. People who would have tapped equity for a housing project, vacation, or another big expense might decide they can't afford it anymore.

Unfortunately many feel (and I agree) that we need a recession to fight this raging out of control inflation. Demand will be severely lessened because the country as a whole will be poorer. It will likely happen, and in fact has no doubt already started.

amother

Sun, Jun 19 2022, 8:31 pm

Do the finance mavens feel the country will be in the same financial boat with a Republican president, no matter who the candidate is, in 2024?

shoshanim999

Sun, Jun 19 2022, 8:43 pm

amother [ Snowdrop ] wrote:

There are many ways to do that, it can be fixed other ways

Are there? Inflation is the result of too little supply and too much demand. Higher rates fight the demand side of this by making it hard to borrow and spend. This lessens demand.

There's less control over the supply side at this point. We can't force China to open their factories.

Of course there's other reasons why inflation is so high such as our governments fight against the oil industry which is part of the reason energy prices are so high. But that fight will continue in the name of protecting the climate.

amother

Mistyrose

Sun, Jun 19 2022, 8:46 pm

shoshanim999 wrote:

So basically we risk deliberately hurting the economy without even fixing the problem. As half the issues are out of the governments control (or they aren’t willing to address them such as energy.)

Rubies

Sun, Jun 19 2022, 8:47 pm

All too litte too late.
Recession is an understatement. Heading to a post-war depression like Germany, where the dollar has no value.

shoshanim999

Sun, Jun 19 2022, 8:59 pm

amother [ Mistyrose ] wrote:

So basically we risk deliberately hurting the economy without even fixing the problem. As half the issues are out of the governments control (or they aren’t willing to address them such as energy.)

I wouldn't say *we risk* hurting the economy. That is the very intention of raising rates. To slow down (hurt) the economy.

Even though we don't have control over the supply side of things, this will still lower inflation. I agree, businesses (and people!) will suffer because of this.

The problem with this recession is that normally when a recession hits, the government will give out stimulus and lower rates to fend off the recession. This recession is very scary because it's the very tools that are normally used to soften the recession that are the reasons for the recession- too much free money and low interest rates.

amother

DarkYellow

Sun, Jun 19 2022, 9:03 pm

amother [ Watermelon ] wrote:

You can look into ARM loans or first time home buyer programs.

Do NOT go for an adjustable rate mortgage. Rates will just go higher for a while and you'll get in trouble when you can't afford the higher payments as they climb each month. Lock yourself in at the current rate so at least your rate won't go up higher. You'll refinance when rates go back down.

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