05/10/2022
This past week, the Federal Reserve hiked the Fed Fund Rate by .50%, the largest rate increase in 22 years. Let's discuss what other action the Fed took, how the market reacted and what to look for in the week ahead.
The lift to the Fed Funds Rate will immediately impact all short-term loans, like auto loans, credit card debt, and home equity lines of credit. Increasing these rates is expected to slow consumer demand, which in effect will slow price increases.
How does the Fed move to bring down inflation? Raise rates and tighten monetary conditions. And this started last Wednesday when the Fed raised the Fed Funds rate by .50%. In a separate measure, the Fed will also begin shrinking its enormous $9T balance sheet of Treasuries and mortgage-backed securities (MBS).
On a positive note,
Housing numbers from Core Logic report a year over year appreciation gain of 21%. Think about this, even at a low conservative increase of 6%…if you put 10% down on a home and you gain 6% in appreciation that is a 60% return on your investment within 1 year allowing for a tremendous amount of wealth creation.
Please let me know if you have any family, friends or co-workers that need to purchase, sell or refinance….We will take very good care of them
Hope you have a healthy and prosperous week,
Elizabeth Stock
505-804-5037
Legacy Mortgage LLC
NMLS: 262990