Interest Rates

CNN Money: What the Fed Interest Rate Hike Means for Homebuyers

The increase has the potential to make buying a home more expensive.

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It’s a difficult market for homebuyers right now. Between high prices and a limited supply, it’s very much a seller’s market. And now that the Federal Reserve raised its interest rate by one-quarter of a percentage point on Wednesday, it could make buying a home more expensive.

But experts don’t think that homebuyers should panic yet. Because the Fed’s latest hike was expected, the markets had already priced it in. That’s why experts don’t see rates moving much higher in the upcoming weeks. However, while the Fed doesn’t directly set mortgage rates, it can still have an impact on the market.

With the current rate, CNN Money says that homebuyers will pay $57 more per month compared to a year ago, assuming a $235,000 listing with a 20 percent down payment. That increase likely isn’t significant for the majority of potential buyers, but it could deter some people on the margin of being able to afford a home from buying.

Len Kiefer, deputy chief economist at Freddie Mac, told CNN Money, “That is going to create a bit of sticker shock for some buyers looking to buy this spring.”

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