Interest rate hike – reactions pour in

He added that the rate hike will also have the effect of slowing down HELOC activity: “For years, HELOC activity has been declining, and rate hikes will only accelerate that trend,” Gifford said. “Banks originating HELOCs have slowly constrained their lending criteria and made the qualification process stricter. Income, debt-to-income ratios, and credit score requirements have increased dramatically from a few years ago. Alternative products have emerged to serve those that financial institutions are leaving behind. We allow homeowners to access their home equity in as little as 10-15 days without income or credit score requirements.”

He noted that rate increases yield yet another hurdle for those longing to achieve homeownership: “Predicting housing stock availability in your area, home prices, interest rates, borrowing qualifications, and physically moving is becoming harder and more uncertain. Unfortunately, homebuyers are facing headwinds on multiple fronts with little reprieve in sight.”

Josip Rupena, CEO of Milo, zeroed in on the inevitability of higher borrowing costs and mortgages for homeowners. The firm he heads offers loans that use bitcoin as collateral not unlike the way a homebuyer seeking traditional mortgages might offer investment accounts, savings or other property.

“It will increase mortgage payments, and borrowers may need to put larger down payments to offset the higher monthly payments to stay within their monthly payment budget,” Rupena said of the Fed’s action. 

In its statement, the Fed did point to strong pockets of the economy, notwithstanding inflation: “Overall economic activity appears to have picked up after edging down in the first quarter,” the central bank’s statement reads. “Job gains have been robust in recent months, and the unemployment rate has remained low. Inflation remains elevated, reflecting supply and demand imbalances related to the pandemic, higher energy prices, and broader price pressures.”