The Fed raised its benchmark rate by 25 basis points to the highest level in 16 years. This puts the Fed’s interest rate between 5% and 5.25%. But the hike is expected to be the last, or at least for a while, according to Greg McBride, chief financial analyst at Bankrate.
“This could be the last,” he said. “If the Fed chooses to sit back and evaluate inflation, the state of the economy, and the cumulative impact of all the rate hikes.”
Mike Fratantoni, chief economist of the Mortgage Bankers Association, agreed that this may be the peak rate for this cycle.
“Potential homebuyers and their mortgage lenders may be breathing a sigh of relief,” Fratantoni said. “We continue to expect that mortgage rates will drift down over the course of the year as the economy slows, as we move closer to the Fed lowering rates beginning in 2024, and as financial market volatility finally begins to settle down.
“In the near term, tighter credit conditions will slow the pace of economic activity. The housing sector is already operating under tight credit, so we don’t expect this headwind to outweigh the benefits from somewhat lower mortgage rates. The housing market is likely pulling the economy out of this slowdown, as it typically does.
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