Yesterday Federal Reserve Chairman Jerome Powell said the economy is not in a recession. Then today’s second quarter GDP (Gross Domestic Product) numbers came out, they were down 0.2%. That’s two consecutive negative quarters for the economy, which is technically a recession.
However, factors like the strong labor market have several analysts conflicted as to whether we’ve hit the big R or not. This has the potential to stabilize mortgage rates for the time being. Stay hopeful. Stay positive.
Rate hike = price hikes
Now that the Fed has raised interest rates 75-basis-points, look for credit card interest rates to go up within a couple billing cycles.
Are you buying a car? Not only are prices through the sunroof, but you’ll pay a little more to borrow the money you need. Adjustable Rate Mortgages (ARMs) may also tick higher depending on the lender.
There is good news for students. Federal student loans won’t change because those rates are set by Congress and there’s still a freeze on student loans through Aug. 31.
Is it possible for mortgages to moderate?
When the Fed raised interest rates back in March, mortgage rates spiked. Then in May and June they only inched higher.
With home sales down 14% in June the market is cooling off. That along with softening home price appreciation may cause this week’s rate hike to have zero impact on mortgage rates.
The big concern is global stability. Russia’s war against Ukraine, Russian energy cuts in Europe and the growing tensions between China and Taiwan are keeping the markets on edge. It’s unclear where mortgage rates will go, but experts say this might be a good time to lock in rates.
All information provided in this publication is for informational and educational purposes only, and in no way is any of the content contained herein to be construed as financial, investment, or legal advice or instruction. Guaranteed Rate does not guarantee the quality, accuracy, completeness or timelines of the information in this publication. While efforts are made to verify the information provided, the information should not be assumed to be error-free. Some information in the publication may have been provided by third parties and has not necessarily been verified by Guaranteed Rate. Guaranteed Rate its affiliates and subsidiaries do not assume any liability for the information contained herein, be it direct, indirect, consequential, special, or exemplary, or other damages whatsoever and howsoever caused, arising out of or in connection with the use of this publication or in reliance on the information, including any personal or pecuniary loss, whether the action is in contract, tort (including negligence) or other tortious action.
John Kistner is Guaranteed Rate’s Market Analyst. Market Updates are designed to provide readers with a high-level yet insightful view of how economic news, events and trends affect mortgage rates and the homebuying process.