SPRINGFIELD, Mo.– The Federal Interest Rate rose recently another .75%. The average federal funds rate is now around 2.25% and 2.5%.
That rise could bring some balance to the local house market.
“People would be able to view multiple properties, take a little bit more time to make a decision and get their foot in the door easier than they were before,” said realtor Dustin Langston.
Whenever the federal rate goes up, banks could raise their rates as well.
“That’s what banks can borrow money from,” said Bren Woody, Vice President of Mortgage Banking at Oak Star Bank. “The Fed, and, you know, the trickle down effect is at play here.”
The rate rose in June with the intention of slowing down inflation. However, that hasn’t necessarily happened locally yet.
“We’re in a little bit more of a balanced market than we were three or four months ago,” Langston said. “However, the median price has gone up still. And we’re continuing to grow.”
But some home buyers have seen their chances of finding a house taking a dip.
“The first-time home buyer, the entry-level homes may struggle to get their foot in the door a little bit more because their ceiling just went down a hair, because of their debt-to-income ratio and the way the payment would be affected by the interest,” Langston said.
As of now, there’s only around 20% of what would be considered a “healthy housing market” available for purchase. And that supply and demand issue can create extra stress.
“The feeling as a buyer is, ‘Here’s the house. You have 20 minutes to make a decision, do it or not. If not, then move away and let the next one in line,'” Langston said. “As a buyer, that’s a tough spot to be in.”