The Fed paused. Now what?

The much anticipated Federal Reserve rate decision happened this past week. The "unanimous" consensus on the part of the Federal Reserve board members was to skip a rate hike at this meeting. Fed Chair Jerome Powell hinted that future hikes are likely with the possibility of two additional hikes by the end of the year and that future decisions will be "data dependent". Additional hikes are intended to quell inflation with a 2% annual target rate. They could also cause more harm to an already fragile banking sector.

What's curious about the "unanimous" decision was Richmond Fed Chair Tom Barkin's remarks shortly after the Fed decision where he shared his views that the Fed "can't take the foot off the pedal" now:

“I am still looking to be convinced of the plausible story that slowing demand returns inflation relatively quickly to that (2%) target,” Barkin said while speaking at the Maryland Government Finance Officer Association. “If coming data doesn’t support that story, I’m comfortable doing more (rate hikes).”

Although Fed rate hikes don't necessarily translate to higher mortgage rates, they do affect investor confidence. While that's in play, mortgage rates are likely to be range bound for the remainder of the year.

Shark Tank guru Barbara Corcoran, whose Corcoran Group has been quite successful in real estate, contends that NOW is the time to buy real estate. Buyers now will be receiving higher rates than what they want but they can refinance when rates come down as expected in the next 1-2 years. She further indicates that waiting to buy will draw more buyers off the sidelines and could cause home prices to go up 10% with the increased competition for limited homes for sale!

On a personal note, I've been working with a buyer for months who has trying to buy a condo in Maryland. She has been outbid on a number of properties with many of these sales happening with cash. On her latest offer, the listing agent revealed to me that there were 6 offers on the property and 3 of them were for all cash. Most closings are happening in 30 days or less so if you need financing to purchase a home, it's crucial to get fully pre-approved for a loan BEFORE you begin your search in earnest.

www.chrisryanloans.com

Refinancing or Buying, contact Chris Ryan!