Many homeowners are feeling “locked in” right now. Either they have a low interest rate that they can’t afford to give up, or they simply can’t find another house to buy.
“We’re seeing this all over the country,” said Michael Gifford, a career real estate expert and the CEO of Splitero, a company that provides homeowners with options to access their home equity.
Some homeowners view it as a glass half-full situation, and they are choosing to repair or renovate their homes.
“I wouldn’t say it’s only a negative thing,” Gifford said.
However, he acknowledged that it is leading some to anxiety.
“The feeling of being locked in is very real, and I think there are some negative side effects of that,” Gifford said.
For example, growing families may want to find a larger place to move to but can’t afford to do that due to the current interest rates.
“Usually, people are trying to step up and find somewhere better to live in those scenarios, and that’s certainly difficult,” said Gifford.
The Federal Reserve raised its key interest rate last month for the 11th time in 17 months as part of its ongoing drive to curb inflation.
Coming on top of its previous hikes, the Fed’s latest action could lead to further increases in the costs of mortgages, auto loans, credit cards and business borrowing.
“The Fed has never raised rates this fast in history, so it is very unique,” Gifford said. “It is those rates, but it is also the housing shortage that we have in most markets in the U.S. right now.”
Fed Chair Jerome Powell has been noncommittal about any expectations for future rate hikes.
Since it began raising rates in March 2022, the Fed has often telegraphed its upcoming action. This time, though, Powell said the Fed’s policymakers may or may not raise rates again at their next meeting in September.
“It is certainly possible that we will raise rates again at the September meeting,” Powell said. “And I would also say it’s possible that we would choose to hold steady at that meeting.”
The Associated Press contributed to this report.
