Here's how the Fed's rate hike could impact mortgages

Lovin Jesus

Lovin Jesus

Well-Known Member
Following the Federal Reserve's widely expected interest rate hike Wednesday, the housing market will likely see an impact in the form of higher mortgage rates.

Though mortgage rates do not follow the federal funds rate, they do typically follow the yield on the 10-year Treasury. Following the Fed's announcement, the 10-year Treasury yield spiked as high as 2.246%, its highest level since May 2019.

Given recent economic uncertainty exacerbated by rising inflation, supply chain disruptions and the ongoing conflict in Russia-Ukraine, Thru the Cycle President John Lonski believes that anyone considering buying a home and taking out a fixed-rate mortgage should do so as soon as possible.

In addition to Wednesday's rate hike, the U.S. central bank's policymakers signaled that six more hikes could be coming by the end of 2022.

Read further
https://www.foxbusiness.com/economy/mortgages-federal-reserve-interest-rate-hike
 
Reason & Hope

Reason & Hope

Well-Known Member
A friend of mine told me that ten years ago they got an ARM. They wanted to refinance when rates were low, but were advised not to. Now their rate is about to jump up to 6.5 or 7%. Not a good place to be.

Still, it's a far cry from the crippling 17% mortgage rate my parents had in the 1970s!
 
Tall Timbers

Tall Timbers

Imperfect but forgiven
Reason & Hope said:
A friend of mine told me that ten years ago they got an ARM. They wanted to refinance when rates were low, but were advised not to. Now their rate is about to jump up to 6.5 or 7%. Not a good place to be.

Still, it's a far cry from the crippling 17% mortgage rate my parents had in the 1970s!
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I had 2 home loans in my life. At the time the 8.something% seemed like a good deal. The other was 11% but was a unique mortgage that I crafted and the bank accepted.
 
Ghoti Ichthus

Ghoti Ichthus

Pray so they do not serve alone. Ephesians 6:10-20
I'm sooooooooooo glad I got my parents to get a 30-year fixed and roll their HELOC into it when they were facing the balloon payment on their old ARM (PLUS paying off the HELOC). Interest rates were very low and the bank was trying to talk them into another ARM with a balloon. They almost got suckered into taking the ARM with a balloon :mad Had they done so, the house payments would have already gone up almost 50 percent :mad

The bank is not our friend. They exist to make money, and elderly are particularly susceptible to making bad decisions when the "advice" comes from someone they think they can trust :furious :rant :mad :wild :frust :cry

I, personally, believe that ARMS should be outlawed. And instead of bailing out the banks, that money should have been used to refinance all the ARMs into fixed-rate with whatever-term-needed to keep the payments at the low payment the mortgage had started out at that the payer could afford. People wouldn't have lost their homes, the economy wouldn't have tanked, and the banks and fat cats would have been fine.
 
Baby Yoda

Baby Yoda

Watchman
Ghoti Ichthus said:
he bank is not our friend. They exist to make money, and elderly are particularly susceptible to making bad decisions when the "advice" comes from someone they think they can trust
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Not all of us are bad. My hubby and I worked together for 30 years at small, local banks and steered everyone to the best plan for their situation. Never took advantage of anyone. :) But, there are enough bad guys out there to make everyone look bad. :confused:
 
Tall Timbers

Tall Timbers

Imperfect but forgiven
Baby Yoda said:
Not all of us are bad. My hubby and I worked together for 30 years at small, local banks and steered everyone to the best plan for their situation. Never took advantage of anyone. :) But, there are enough bad guys out there to make everyone look bad. :confused:
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I have a brother-in-law who is a real people person. He worked for a local power company for decades and was mayor of his town for a good many years. When he's out walking he stops and talks to everyone. After he retired a local bank executive approached him and offered him a job. His job was to spread good will and to weigh in on all the loan decisions the bank made. My brother-in-law knew literally everyone in the area and knew them on a personal basis. He could tell the bank whether or not the person was a good risk and whether or not he thought the person(s) had a good chance of success if they were getting a loan for a business endeavor. The local bank got bought up by a regional and they wanted to relocate my brother-in-law who had become a respected executive. He loved the job but was gonna leave... he explained to the new owners what his strengths were and how he deployed them and they decided to keep using him at the few branches where he was contributing. What he did was good for the customer and good for the bank.
 
Baby Yoda

Baby Yoda

Watchman
Tall Timbers said:
he local bank got bought up by a regional and they wanted to relocate my brother-in-law who had become a respected executive. He loved the job but was gonna leave... he explained to the new owners what his strengths were and how he deployed them and they decided to keep using him at the few branches where he was contributing. What he did was good for the customer and good for the bank.
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That's great to hear! Bank mergers and acquisitions ruin everything, but I'm glad your BIL was such a good community asset. :nod
 
Tall Timbers

Tall Timbers

Imperfect but forgiven
Baby Yoda said:
That's great to hear! Bank mergers and acquisitions ruin everything, but I'm glad your BIL was such a good community asset. :nod
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I have a lot of admiration for the guy. The town loved him as mayor. He was approached about running for a state seat and he became interested but very quickly did an about face when he came to understand he'd have to compromise his integrity to maintain party support.
 
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