The leadership of the Mortgage Bankers Association, the National Association of Home Builders and the National Association of Realtors have sent a joint letter to Federal Reserve Chairman Jerome Powell warning that the central bank’s policy of rate hikes is creating tumult within the U.S. housing market.
In their letter, the trade groups told Powell that “ongoing market uncertainty about the Fed’s rate path is contributing to recent interest rate hikes and volatility.” As a result of the Fed’s actions, the trade groups pointed to mortgage rates being elevated to a level not seen since 2000 and mortgage application activity plummeting to a level not seen since 1996.
“Today, the spread between 30-year mortgage rates and 10-year Treasury yield is at historically high levels,” the letter continued, “signally deep-seated uncertainty about where the Fed is headed.”
Powell was called upon to ease the market jitters by making two public pronouncements: that the Fed does not contemplate making additional rate hikes and that it will not sell off any of its mortgage-backed securities holdings until the housing markets stabilize and the spread between mortgage rates and the Treasury yield is normalized.
“We urge the Fed to take these simple steps to ensure that this sector does not precipitate the hard landing the Fed has tried so hard to avoid,” the letter added.
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COVID lock-downs are the only reason why market inflated to an unrealistic amount. That and and having these low interest rates for way too long. The fed has repeatedly warned to get better there will be pain. Anyone who bought in an inflated market to escape Covid lock-down rules will have to feel the hurt for the other 70% of the country that was smart enough to know it was a false market. Wait till the builders stop faking their supply shortages. Prices will continue to drop. I know the Fed is smarter than these people begging for low interest rates. I hope they continue to go up until the builders stop price gouging. At that point it wont matter if they go lower.
Wow. Most vapid, unrealistic response to an article ive ever seen from submitter “N”. Part of your “fake supply shortages” with builders is that materials and labor are at an extreme high, pushing the price of even a starter home out of reach for the potential buyers in that market. They can build them, but no one willl come. As far as existing home sales, it’s pretty tough to convince someone to move out of their home with a 3% mortgage and a bunch of equity to a home which costs more than their their current (for the same ammenities/location, etc.) at an 8% rate. How does Super-Smart J-Pow fix that one?
New construction is the cause of the resales inflating to unrealistic levels. The rates are and will continue to correct this. These builders are making record profits. We are a general contractor. Anyone who bought during the pandemic is at risk of going upside down on their property due to the lockdown immigration that came to Florida. What goes up must come down. We will continue watching these prices drop as they should.