The Fed’s New Interest Rate Hike Explained

The Fed (Federal Reserve) just raised interest rates for the first time in years. What does this mean for the housing market as a whole, and what about individual real estate investors? Are we looking down the barrel of a high-interest rate future, or is this only a temporary measure to curb inflation? And what about homebuyers who are still looking on the market for housing inventory?

All this, and the data to back it up, will be explained by Dave Meyer on today’s episode. Dave (and most other investors) has been speculating for a while that the Federal Reserve would start to raise rates, but now we have a bit more context behind the decision. The rate hikes will impact bond yields, which by default will impact mortgage rates, which of course will be passed down to you, the homebuyer, as your final amount of interest.

So what happens next? Are we in store for a wildly-high interest rise? And if so, does real estate investing become less lucrative for everyday investors? Watch on to find out!

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Graphs and Charts Mentioned in This Video:
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Will Rising Interest Rates Tank the Housing Market?
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How Do Interest Rates Really Affect Your Investments? A Deep Dive:
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Fed Signals a Dramatic Shift in Policy—With Big Changes Coming for Interest Rates:
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0:00 Interest Rates are Rising!
01:04 Why Raise Rates?
02:50 How This Affects Homebuyers
04:07 What Did the Fed Decide?
06:25 Where Will Mortgage Rates Go Next?
08:21 What Happens Now in The Housing Market?

[qmakesithappen]

Awesome video Dave!!! Your breakdowns are so easy to follow!

[davidripplinger]

Don't ask me to give a thumbs up before finishing the video.

[chrisblanc]

I don’t think the fed is being aggressive at all considering the inflation problem. If we end up having an interest rate below 5% by end of year, while already an inflation rate of almost 8%. It feels like they are using a leaky hose to drain a lake.
Further it looks like a recession is already on its way, if not already here, so being truly aggressive will only shorten that recession, albeit feel much worst in the short term. I would prefer the short acute pain, rather then a slow death by too much toxic cash. Think like gangrene. Cutting off the limb will be painful and leave lasting scars, but trying to suck out the bad blood slowly will only slow down the poison. It seems to me the fed is trying to slowly suck the poison out, while the vital organs of the economy one by one shut down.

[codyrichard]

This didn't age well. 30yr fixed already at 4.6% + with strong projections beyond 5% by YE.

[AverageYouTubaEnjoyer]

Hi Dave! Thanks again for the great video. You mentioned that 30 Year Fixed, Owner Occupied Homes are predicted to be at 4.5% - 4.75% Interest Rate by EOY. What about interest rates on Conventional Mortgages and/or Second Home Loan? Those tend to be higher, but what are your predictions on those type of interest rates by EOY? Thank you!

[christophermadeira]

Great video.. I really enjoy these short videos on specific topics!! Very timely and relevant!

[Turb]

But we’re already at 4.5%. Isn’t a minimum of 5% more realistic?

Also, if you’re in cash, you only loose 5-10% on what you’re spending if you’re team transitory. If in 1 year we’re down to 4% inflation but down 5%+ in housing, you have liquid cash to reinvest when the opportunity arrives and you saved you 1% vs being potentially being negative that 5%+ in a new property in the short term. Cash is always a good option with up and coming opportunities IF you believe inflation will decrease.

[alxcdog]

Appreciate your valuable insight. I truly get educated & I come away with a different mindset listening to you. Plus, the great conversations in the comments are also great. I had to research the Weimar hyperinflation fiasco & what the had to do to come out of that, WOW. My bubble is getting bigger as I let more in. Thanks to those guys too.
Except those bots on the 1st post. That's such B.S. anyway thanks again bro.

[nicholaspreston]

Dave, if the purpose of raising the funds rate is to suck up money that’s chasing too few goods, well isn’t that what inflation does on its own? The more something costs the fewer will be sold? Does it not end up fighting itself if that’s the case and naturally cause prices to fall once it reaches its peak due to it being too expensive?

[joeharvie]

Michael Saylor says you are loosing 20% of the value of your dollar. That's why people are buying bitcoin and real-estate. The printing of fiat money has reduced its value so it takes more paper to buy the hard asset. Just like in Weimar Germany it took a wheel barrow full of money to buy a loaf of bread.

[SmashBrosBrawl]

Gonna suck for all those biggerPocket speculators that are about to get wiped out lmao

[johnspencer]

Just closed on a 460k house in vermont that I have to leave in 3 years, wish me luck bois!

[intewiseinvesting]

I’m a new investor so I’m just wanting to see if I’m thinking the right way. It seems to me that this is a good time to focus on rental income maybe instead of flipping 🤔? Or even creating tenant buyer situations. I say this because I feel like with us entering an era where sellers are literally getting multiple offers on their homes and rates going up, renting may be the most attractive and logical decision for many. In addition to that I would say renting rooms instead of whole homes might be more attractive for potential tenants. Educate me if I’m not seeing this right.

[Sean-jbgi]

You have to explain what the fed explained LAST YEAR?

[bondedcastaway]

I didnt understand can I still afford to buy a house?