It is hard for the Fed to increase interest rates without a risk of causing a recession. An increase in interest rates also puts downward pressure on real estate values as new buyers now qualify for lower monthly payments.
It is a sad reality that to protect our investments, not only do we need to roughly predict what the Fed is going to say, but if the really mean what they say.
In the last Fed meeting, Powell created the impression that the Fed would increase interest rates three times in 2022. But does he really mean that?
Louis S. Barnes was on point before the Great Recession so we should listen to his thoughts. In a recent blog post, he said that Powell has become a master of Fed-speak.
He believes that Powell merely created the impression that the Fed would push up the overnight cost of money nearly to 1.00% from today’s .25%. But the Fed’s own post-meeting materials do not support a hike so large. When the first hike? Not the slightest clue in Powell fog. Not soon.
That means that real estate investors can breathe a bit easier. If rates are not increased soon, the bubble can keep inflating for a while longer. Happy New Year!
https://www.pmglending.com/blog/article/mortgage-credit-news-by-louis-s-barnes-december-17-2021