According to analysts at Goldman Sachs, there is an 85% chance that interest rates will rise as soon as September, causing more expensive mortgages for potential home buyers, reports HousingWire's Jacob Gaffney. He writes:
"In his prepared remarks and testimony before Congress, Fed Chairman Powell reinforced his recent message that the labor market has improved, inflation has moved up, and there is a strong case for gradual rate hikes," the economics team at Goldman wrote in an email to clients. Specifically on the general economics, the team adds their interpretation of Powell's economic viewpoints:
“On the labor market, he concluded that “we are close to full employment but maybe not quite there.” On inflation, he noted that “moderate wage growth tells us that the job market is not causing higher inflation.” When asked about the risks to the 2% inflation objective, he said that he thought the risks are “roughly balanced,” but that he is “maybe slightly more worried about lower inflation still.” Like other Fed officials, he wants core inflation to be at roughly 2% for a while, not just touch it."
The good news is, Mark Fleming, chief economist for First American, believes the lending market will not be marginally impacted by higher rates. He thinks the homebuying market would survive, even if interest rates were to double.Read More