Federal Reserve raises interest rates
MID-MICHIGAN (WNEM) - There was another interest rate hike by the Federal Reserve on Wednesday, Feb. 1, but a mortgage expert said it was expected and called it a positive sign.
“So, the mortgage-backed securities market, it’s kind of like stocks. There’s prices paid for mortgages at different rates and so those prices go up and down daily, and so we’ve seen a little bit of improvement in pricing today after the announcement,” said Jeff Tufford, the president of Epic Mortgage in Grand Blanc.
Wednesday’s interest rate hike of just a quarter point is the smallest since the Federal Reserve began raising rates last March.
It is a delicate dance as the central bank tries to cool inflation without triggering a recession.
Prices are easing, but it costs more to borrow money.
The average rate on a 30-year mortgage is 6.1 percent, which is down from previous weeks but still way above 3.5 percent at this time last year. The average used car loan is 10.6 percent, up from 7.5 percent a year ago. Credit card rates are just under 20 percent.
“I’d still say houses are more affordable to purchase than rent, of course, because you are investing in your future,” Tufford said. “You are putting money into principle so you’re building up an asset and you can still get into a house at a very comparable or better monthly payment than you can renting, but we always want to see those rates come down though because the more they drop, the more affordable homes are.”
Tufford said he is hopeful that by the second or third quarter, interest rates will come down.
The Federal Reserve will look at interest rates again in March.
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