Federal Reserve’s interest rate hike making SWFL home ownership more expensive

The Federal Reserve’s decision to increase interest rates will hit a lot of the ways you borrow money, including mortgages. In fact, mortgages are already at the highest rate since 2009.

When you combine soaring housing prices with high mortgages and an increased interest rate, homes get even more expensive.

When the rates increase on a federal level, it affects interest rates on any type of loan. In Florida’s hot market, buyers battle the power of inflation on food, gas and the price tag on homes.

“I’m talking to people a lot about separating their needs versus their wants, and being very, very careful about what goes on the needs list,” said Scott DiGregorio, producing branch manager with NEO Home Loans Team DiGregorio.

DiGregorio said buyers will have to make more room for an increased mortgage rate.

The Federal Reserve raised the federal funds rate by half a percentage point. The highest in 22 years. While that means lower costs in some areas, it also equates to higher interest rates for home loans.

The 30-year fixed mortgage rate averaged 5.27% in the week ending May 5. That is up from 5.10%, the week before, what difference does that make?

“That’s about $50 a month on average home price here. So that’s not too big of a deal. The bigger piece of that, in my opinion, is that in the last 60 or 75 days, interest rates have gone up to full percentage points. And that’s hundreds and hundreds of dollars per month. And that is a definite factor into people’s budgets,” said DiGregorio.

Laura Ray, the CFO of Liberty Mortgage Lending Group said the impact goes beyond that. “The employment the income has not really met yet, with inflation, it hasn’t really met yet with rental prices. So this is a very precarious position for a lot of people locally in lee county. I don’t know where they’re going,” said Ray.

“Every time we were in a massive period of inflation, the fed’s actions to curb the inflation every single time put us into a recession,” DiGregorio said.

Lender Freddie Mac predicts house prices will continue to grow for now but will lower in the coming months.

2.96% was the average 30-year fixed-rate mortgage at this time last year. It has nearly doubled this year.