Fed votes to increase interest rates, projects more hikes in 2022: Massachusetts Homebuyers Homeownership

 The Federal Reserve announced today that it would increase the federal funds rate by 0.25 percent, its first increase in more than three years. This move by the Fed was widely expected as pandemic-related supply disruptions and broader price pressures have sparked the country’s worst inflation since the 1970s. The Federal Open Market Committee (FOMC) signaled that it would most likely continue to raise rates throughout 2022, pointing to a consensus funds rate of 1.9 percent by the end of the year. Four additional hikes are forecasted for 2023, boosting the benchmark rate to 2.8 percent, the highest level since 2008.

 According to updated quarterly projections, policymakers expect inflation to remain elevated and to end 2022 at 4.3 percent. In addition, committee members expect the personal consumption expenditures price index excluding food and energy to see 4.1 percent growth this year, compared to the 2.7 percent projection in December. In a statement following today’s announcement, the FOMC also addressed the impact of Russia’s invasion of Ukraine. “The implications for the U.S. economy are highly uncertain, but in the near term, the invasion and related events are likely to create additional upward pressure on inflation and weigh on economic activity,” the release noted.

 Regarding the housing market, while interest rate changes may not directly impact mortgage rates, “‘quantitative un-easing’ places upward pressure on mortgage rates,” according to Odeta Kushi, First American Deputy Chief Economist. “Mortgage rates have already trended higher in recent months due to a strong economy, higher inflation expectations and the prospect of Fed tightening.” According to Freddie Mac, rates on thirty year fixed rate mortgages averaged 3.85 percent as of March 10, up from 2.65 percent in January 2021.

 “The housing market will likely remain competitive as an improving labor market with its own supply demand imbalance results in higher wages, which helps boost house buying power, and as millennial driven demand for homes against a limited supply of homes for sale continues to push house prices upward,” said Kushi. He added, “One possible outcome from rising rates? A market that moves closer to equilibrium, with less price appreciation than last year.”

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Changes in Massachusetts Real Estate Law & How they Effect the Consumer:

Who Pays the Home Buyer's Agent?

Both seller's agent fees and buyer agent's fees are part of a typical real estate transaction and are included in the final negotiated purchase price of the property. There should be no additional fees to the buyer for a buyer's agent above and beyond the negotiated purchase price of a home unless specifically agreed in writing between the buyer and agent before an offer is made.

In most cases, the seller's agent pays the buyer's agent for bringing the buyer, negotiating the purchase price and terms, writing a legally correct offer, coordinating inspections, responses, and financing plus handling numerous additional details on the buyer's side of the transaction.

Buyers should avoid contacting seller's agents and sellers directly unless they are comfortable negotiating and representing themselves. That is why it is important for buyers to choose their agents BEFORE they begin looking at homes or as soon as possible if they have begun looking.

Did you know that fewer than one percent of the agents and brokers in Massachusetts have committed to being 100% loyal to their buyers 100% of the time?

To learn more about the pros and cons of various types of buyer agents, or to get a list of experienced local 100% loyal buyer's agents to interview without obligation, click the button below.

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