Mortgage interest Rates going upMortage rates Rising interest rates
Jerome Powell, Chairman of the Federal Reserve, told the House Committee on Financial Services that although the residential property sector is still important to the American dream, it is just not the driving force behind the economy it once was, and in fact does not have much influence on policymaking. Unsurprisingly, the Federal Reserve has not taken into account the Americans' credit problems today.
Despite a shortage of funds and scarce lending terms (more than 1 million mortgage loans failed by some estimates), the Federal Reserve continues to believe it can raise interest rates further. Goldman Sachs continues to see an 85% opportunity for higher interest rates and more costly mortgage rates for prospective real estate buyers as early as September, according to Goldman Sachs analysis.
"Fed Chairman Powell, in his pre-congressional comments and testimonies, reiterated his recent news that the labour markets have been improving, rising rates of inflation and there is a powerful argument for gradually raising interest rates," Goldman's business unit emailed customers. In particular, in relation to the general economy, the teams add their interpretations of Powell's business views:
"On the labour front, he came to the conclusion that "we're near full-time, but maybe not quite so far." Regarding headline rate increases, he noted that "a modest rise in wages shows us that the labour markets are not creating higher inflation". Good news is Mark Fleming, First American' lead analyst, says the credit markets will not be affected by higher interest rates marginal.
It believes that the real estate markets would live on even if interest rates doubled. "Given this historic background, is the residential property markets today as vulnerable to mortgage interest rates hikes as they were 40 years ago? What would a significant rise in the 30-year interest fix have on today's property market?"
Indeed, with our house sale proposition scheme, we have been able to double the mortgage interest from currently around 4.4% to around 9% and reduce the home sale proposition from currently 6.1 million SAAR to 5.8 million SAAR. So if mortgage rates double over night, our mortgage pricing shows a drop of only 300,000 units sold, a drop of only 5%."