The Federal Reserve: The Real Villain Behind the Great American Housing Crisis?

Get ready for a tale of fiscal folly that has Americans gnashing their teeth in frustration. While everyone is busy pointing fingers at international trade wars and fluctuating Treasury yields for skyrocketing mortgage rates, let's shed light on the real puppet master pulling the strings: the Federal Reserve. Oh yes, the guardians of the U.S. economy are doing a splendid job of turning the housing market into a game of Russian roulette.

We've already gone through how mortgage rates are undergoing seismic shifts, with both fixed-term and adjustable-rate mortgages soaring to 20-year highs, from record lows set in 2020, causing mild hysteria at dinner tables across the country. But what's juicing this volatility? It's the Federal Reserve's relentless push to hike up interest rates. Aimed at controlling inflation and other macroeconomic issues, the outcome is wreaking havoc on the hopes and dreams of homeowners and would-be buyers alike.

Think you're immune? Think again. Whether you're an average Joe looking to step onto the property ladder, or you're already ensconced in your dream abode, the Fed's actions will come knocking at your door, and they're not bringing a welcome basket. With the Federal Reserve pouring metaphorical gasoline on the already inflamed mortgage market, current mortgage rates are surging like there's no tomorrow. And remember, we're not talking about a harmless uptick; these are dramatic shifts that are adding weighty dollars to your long-term obligations. 30-year mortgage rates today are over 7.00 percent, nearing 8.00 percent. 5-year adjustable mortgage rates averaged over 8.00 percent and Bank of America was offering several adjustable rates over 8.00 percent.

Loan Type

Purchase Refinance with Cash out Refinance

State

Alabama Alaska Arizona Arkansas California Colorado Connecticut Delaware District Of Columbia Florida Georgia Hawaii Idaho Illinois Indiana Iowa Kansas Kentucky Louisiana Maine Maryland Massachusetts Michigan Minnesota Mississippi Missouri Montana Nebraska Nevada New Hampshire New Jersey New Mexico New York North Carolina North Dakota Ohio Oklahoma Oregon Pennsylvania Rhode Island South Carolina South Dakota Tennessee Texas Utah Vermont Virginia Washington West Virginia Wisconsin Wyoming

FICO Score

Superior (780-850) Exceptional (760-779) Excellent (740-759) Very Good (720-739) Good (700-719) Above Average (680-699) Average (660-679) Fair (640-659) Need Improvement (620-639) Poor (350-620)

Loan Amount

$

Points

Up to 0 points Up to 0.5 points Up to 1 points Up to 1.5 points Up to 2 points Up to 2.5 points Up to 3 points

LTV

%

Loan Term

 15-Year Fixed  20-Year Fixed  30-Year Fixed  5-Year ARM  7-Year ARM  10-Year ARM

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The lenders whose rates and other terms appear on this chart are ICB's advertising partners. They provide their rate information to our data partner RateUpdate.com. Unless adjusted by the consumer, advertisers are sorted by APR from lowest to highest. For any advertising partners that do not provide their rate they are listed in advertisement display units at the bottom of the chart. Advertising partners may not pay to improve the frequency priority or prominence of their display. The interest rates, annual percentage rates and other terms advertised here are estimates provided by those advertising partners based on the information you entered above and do not bind. Any lender Monthly payment amounts stated do not include amounts for taxes and insurance premiums. The actual payment obligation will be greater if taxes and insurance are included. Although our data partner RateUpdate.com collects the information from the financial institutions themselves, the accuracy of the data cannot be guaranteed. Rates may change without notice and can change intraday. Some of the information contained in the rate tables including but not limited to special marketing notes is provided directly by the lenders. Please verify the rates and offers before applying for a loan with the financial institution themselves. No rate is binding until locked by a lender.

Lender

APR / Rate

Fees / Points

Payment

NMLS #1283930

License: 01970483

5.445%

15-Year Fixed

5.250%

$5,125

Includes 1.000 points for $4,000

Lender Fees: $1,125

$3,216 /mo

Next >

NMLS #1838

5.455%

15-Year Fixed

5.250%

$5,395

Includes 0.974 points for $3,896

Lender Fees: $1,499

$3,216 /mo

Next >

NMLS #1025894

5.548%

15-Year Fixed

5.375%

$4,512

Includes 0.953 points for $3,812

Lender Fees: $700

$3,242 /mo

Next >

NMLS #401822

6.039%

15-Year Fixed

5.750%

$7,500

Includes 0.875 points for $3,500

Lender Fees: $4,000

$3,322 /mo

Next >

NMLS #3030

6.146%

15-Year Fixed

5.990%

$4,000

Includes 1.000 points for $4,000

Lender Fees: $0

$3,374 /mo

Next >

NMLS #1838

6.231%

30-Year Fixed

6.125%

$4,535

Includes 0.759 points for $3,036

Lender Fees: $1,499

$2,431 /mo

Next >

NMLS #401822

6.289%

30-Year Fixed

6.125%

$7,000

Includes 0.750 points for $3,000

Lender Fees: $4,000

$2,431 /mo

Next >

NMLS #1283930

License: 01970483

6.347%

30-Year Fixed

6.250%

$4,125

Includes 0.750 points for $3,000

Lender Fees: $1,125

$2,463 /mo

Next >

NMLS #1025894

6.477%

30-Year Fixed

6.375%

$4,284

Includes 0.896 points for $3,584

Lender Fees: $700

$2,496 /mo

Next >

NMLS #3030

6.949%

30-Year Fixed

6.875%

$3,000

Includes 0.750 points for $3,000

Lender Fees: $0

$2,628 /mo

Next >

Rate data provided by RateUpdate.com. Displayed by ICB, a division of Mortgage Research Center, NMLS #1907, Equal Housing Opportunity. Payments do not include taxes and insurance premiums. Actual payments will be greater with taxes and insurance included. Rate and product details.

But wait, there's more! The Fed's actions have a domino effect that cascades through the entire housing market. High interest rates effectively put the brakes on borrowing, thereby clogging the arteries of real estate growth. What happens when people don't want to borrow at these high rates and current homeowners don't want to sell because they've locked in a low rate a couple years ago? Home prices continue to move higher as a result.

Perhaps the most insidious aspect is the socioeconomic impact. We're staring down the barrel of a future where the middle and lower-income brackets are effectively locked out of home ownership. Sure, high interest rates might be a rich man's annoyance, but for the middle class, they're a barrier, and for the lower-income groups, they're often an insurmountable wall. Essentially, the Fed's policies could be manufacturing a housing crisis that discriminates based on income, turning the universal dream of home ownership into an exclusive club.

So, what's an aspiring or current homeowner to do amidst this financial maelstrom? First, your online mortgage rate comparison game needs to be strong—like, "Olympic athlete" strong. Second, consider making your voice heard in the policy arena. The story behind every mortgage rate is a story of real people making real life decisions, and those stories deserve to be part of the policy conversation.

If you're wondering why the housing market feels like it's on shaky ground, consider directing your ire towards the Federal Reserve. We're talking about an institution that, in its quest to manage macroeconomic dynamics, is inadvertently throwing the average American's housing aspirations under the bus. The great American mortgage/housing crisis might just be getting started, who knows when rates will stop going up and start coming down? When rates do finally move lower, will that open the fold gates for home buyers and drive home prices even higher? Barbara Corcoran recently said housing prices could soar when mortgage rates come down.