When Interest Rates Collide with Real Life
It’s easy for the average home buyer or seller to feel like interest rates are just a far-off number—something the Fed talks about on CNBC that doesn’t really affect your day-to-day life. But make no mistake: today’s interest rate debate is very real, and very personal, for anyone thinking about buying or selling a home.
Just this week, Federal Housing Finance Agency (FHFA) Director Bill Pulte took to social media with a pointed message: “Jay Powell is hurting the housing market by being Too Late to lower rates. He needs to resign, effective immediately.” That’s not some internet hot take—Pulte runs the agency that oversees Fannie Mae and Freddie Mac, the backbone of the U.S. mortgage system.
The crux of his argument? High interest rates are freezing up the housing market. “Jerome Powell is a main reason for the Housing Supply Crisis in this Country,” Pulte said. “By improperly keeping interest rates high, [he] is trapping homeowners in low-rate mortgages and choking off existing home sales”.
Here’s what that means in real terms: if you own a home with a 3% mortgage, you’re unlikely to sell it only to take on a new mortgage at 7%. So you stay put. And if you’re a buyer, there are fewer homes to choose from, and they’re more expensive to finance. That’s how we end up in a market with tight inventory, stalled sales, and frustrated buyers and sellers.
Now, to be fair, the Federal Reserve isn’t focused solely on the housing market. Chair Jerome Powell responded by saying, “I think the best thing we can do for the housing market is to restore price stability in a sustainable way and create a strong labor market”. Translation: they’re playing the long game, trying to curb inflation before anything else.
But if you’re trying to buy your first home—or make a move to your next one—that long game may not help you much today. It’s yet another reason why timing, strategy, and working with someone who knows how to navigate this kind of market matter more than ever.