REAL TALK

NEWS POLITICS

Bidenomics 101: Federal Reserve’s Aggressive Moves Hit Housing Market Hard

ByAlki David

Aug 20, 2023

Amidst a tumultuous economic landscape, the aftermath of the Federal Reserve’s audacious economic agenda has manifested in soaring inflation rates, reaching levels not witnessed in four decades. Concurrently, American citizens grapple with over two years of negative real wage growth, a relentless and disheartening trend. In a bold move, the Federal Reserve has undertaken a series of interest rate hikes, reminiscent of bygone decades, in an effort to combat the runaway inflation.

However, the consequences of these aggressive interest rate hikes have now reverberated into the housing market, causing a seismic shift. Mortgage rates, the bedrock of the housing sector, have skyrocketed to an unprecedented high, surpassing a staggering seven percent. A freshly released national average, as per Freddie Mac, lays bare the stark reality.

According to The Wall Street Journal, this surge in mortgage rates signifies an elongated period of exorbitant borrowing costs, which has crippled the housing market’s momentum. For the first time since the preceding autumn, the rate attached to a 30-year fixed-rate mortgage has surpassed the ominous threshold of seven percent, a considerable jump from last year’s five percent benchmark. The domino effect of this rate hike reaches far and wide, as the housing sector faces the direct brunt of the Federal Reserve’s bold policies.

This blow to the housing market has had ripple effects, rippling into various sectors, with the refinancing and purchase activities taking a substantial hit. The resultant layoffs and turmoil within the mortgage lending industry have rippled into the economy, burdening economic growth. Though mortgage rates are not inextricably tied to the Federal Reserve’s maneuvers, they correlate loosely with the fluctuations of the 10-year Treasury yield. Remarkably, the 10-year Treasury yield has now reached its zenith since 2007, fueling speculations of its continued ascent.

Drawing parallels to the skepticism that once surrounded the Biden administration’s initial assertion of “transitory” inflation, The Wall Street Journal poignantly notes that the surging cost of borrowing for home purchases was originally believed to be ephemeral. Regrettably, the mounting evidence suggests otherwise. The Fed’s sustained series of interest rate hikes has engendered a shift in perspective, leading buyers, sellers, investors, and real estate stakeholders to recalibrate their expectations regarding the permanence of these elevated rates.

In an economic reality that appears to mirror the skepticism surrounding the Biden administration’s initial claims about inflation, the housing market grapples with the enduring consequences of the Federal Reserve’s audacious policies. While experts and analysts scrutinize the unfolding developments, one thing remains certain: the newfound normalcy of skyrocketing mortgage rates has ushered in a new era for the housing market, redefining its landscape for years to come.

By Alki David

Alki David — Publisher, Media Architect, SIN Network Creator - live, direct-to-public communication, media infrastructure, accountability journalism, and independent distribution. Born in Lagos, Nigeria; educated in the United Kingdom and Switzerland; attended the Royal College of Art. Early internet broadcaster — participated in real-time public coverage during the 1997 Mars landing era using experimental online transmission from Beverly Hills. Founder of FilmOn, one of the earliest global internet television networks offering live and on-demand broadcasting outside legacy gatekeepers. Publisher of SHOCKYA — reporting since 2010 on systemic corruption inside the entertainment business and its expansion into law, finance, and regulation. Creator of the SIN Network (ShockYA Integrated Network), a federated media and civic-information infrastructure spanning investigative journalism, live TV, documentary, and court-record reporting. Lived and worked for over 40 years inside global media hubs including Malibu, Beverly Hills, London, Hong Kong and Gstaad. Early encounter with Julian Assange during the first Hologram USA operations proved a formative turning point — exposing the realities of lawfare, information suppression, and concentrated media power. Principal complainant and driving force behind what court filings describe as the largest consolidated media–legal accountability action on record, now before the Eastern Caribbean Supreme Court. Relocated to Antigua & Barbuda and entered sustained legal, civic, and informational confrontation over media power, safeguarding, and accountability at Commonwealth scale.