What real estate professionals should know about the Fed rate hike

The Federal Reserve’s decision Wednesday to raise its benchmark interest rate to a target range of 3.75% to 4% is rippling through the housing industry. Real estate brokers and agents are bracing for a market that could further sideline first-time buyers while giving pause to sellers clinging to pandemic-era price expectations. The unanimous 12-0 vote by the Federal Open Market Committee marked the first rate increase after five consecutive meetings on hold. Although mortgage rates are tied more closely to long-term Treasury yields than to the federal funds rate, the psychological effect on buyers and sellers is immediate, said Abraham Sarway, a New York City broker for Douglas Elliman. “It’s a confidence thing for the marketplace — meaning that clients, buyers and sellers are adjusting to a higher rate environment, higher than we’ve seen,” he told HousingWire. “You know, with what’s going on in the world geopolitically, keeping the 10-year Treasury high is also the issue. It’s like a two-for-one, a buyer confidence issue rather than just a knee-jerk reaction price change.” For agents, the challenge is twofold; managing expectations and keeping deals alive. “While I don’t expect on...