BOISE, Idaho — Federal Reserve chairman Jerome Powell announced a 0.75% hike in interest rates Wednesday to combat rising inflation.
"Today, the FOMC raised its policy interest rate by three-quarters of a percentage point," Powell said in a news conference, "We anticipate that ongoing increases will be appropriate. We our moving our policy stance purposefully to a level that will be sufficiently restrictive to return inflation to 2%."
Mortgage rates have topped 6% for the first time since 2008.
"Those are rates we just haven't seen for a long time," associate broker at Go Idaho Powered by EXP Realty, Greg Langhaim said. "At least it feels like a long time."
The hike comes at the same time Boise has been seeing a steady decline in home sales.
"Specifically for Boise, I think it's going to cool things down a bit," Langhaim said. "We've ramped up at record pace. Everyone knows that we became so popular across the nation for new housing. So, I think it's going to cool things down a bit."
Wednesday's meeting was the third-straight time the Fed has hiked interest rates, and the fifth time this year.
"Naturally, what rises falls," Langhaim said. "So, if the interest rate rises continually, then the prices will continue to drop. So, I think we're going to see a lot of uncertainty in the next little while in the housing market."
With prices down and rates up, the turbulence in the market has been causing buyers, especially those looking for their first home, to step back and consider what they can afford.
Langhaim said the changing prices are part of the housing market adjusting after rapid growth over the past years.
"There's a race to the bottom, and right now we're seeing a normalization," Langhaim said. "Which is healthy for a real estate market."
Langhaim said the declining house prices still make now a good time to buy, especially before the holiday season. However, new buyers will have to battle rising interest rates.
"Assuming you're buying a $500,000 home at a fixed-rate with what the current rate is, a 30-year fix and everything checks off," Langhaim said. "With the new rate increase, it's going to affect your payment by $133 a month."
Langhaim has advice for those looking to buy:
"Make sure whoever you are talking to, a local lender is always who I recommend," Langhaim said. "Go local because they know every program that's out there and they'll be able to take your situation and apply it here locally."
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