Federal Reserve trying to make Housing Crash? #shorts #realestate #neelhome

22 Apr 2022

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Neel Dhingra explains how the Fed's mortgage-backed security purchases kept rates low and fueled home price growth. When the Fed stopped buying in early 2022, mortgage rates rose, cutting buyers' purchasing power and cooling demand without blocking qualified borrowers.

Did the government just make it harder to buy a house? Well, sort of. The Federal Reserve or Central bank of the United States had been keeping mortgage rates low by buying mortgage bonds. They actually pushed rates so low that it made the cost of borrowing money ridiculously cheap. This stimulated more borrowing and more money flowing into the economy. Now, this was part of the reason why home prices rose so fast. Well, as of a couple months ago, the Federal Reserve said they're going to stop doing this, which caused home loan rates to rise. So as of today, you can still get a home loan at a fair interest rate, but it's not crazy low like it was last year. Now, for people who could afford to buy a home, this really doesn't affect them too much, but it does reduce a buyer's purchasing power, which will cause demand to cool off a little bit.