Financial expert Kelly Brothers discusses the impact of the Federal Reserve’s interest rate hike

Financial expert Kelly Brothers discusses the impact of the Federal Reserve’s interest rate hike



THE HOUSING MARKET IS COOLING, WITH HOME SALES FALLING FOR SEVEN CONSECUTIVE MONTHS. >>KELLY BROTHERS, KCRA 3 MONEY EXPERT, JOINS US NOW TO MAKE SENSE OF THIS INTEREST RATE RISE. KELLY, WHAT IMPACT CAN WE SEE? >> WE HAVE SEEN MULTIPLE IMPACTS ALREADY, BUT ANY VARIABLE INTEREST RATE PRODUCT, WHETHER IT’S A CREDIT CARD AND CAR LOAN, EVEN HOME LOAN CREDIT LINES OR MORTGAGES WHICH ARE LONGER TERM LOAN FACILITIES, ALL IMPACTED BY THIS, ALL TEND TO MOVE A LITTLE HIGHER, ALL MAKING LIVING MUCH MORE EXPENSIVE THAN IT WAS BEFORE. ON THE POSITIVE SIDE, FOR SAVERS WHO HAVE NOTHING, I WANT ZERO FOR THE LAST TWO YEARS, FINALLY GET MONEY VIA CDs, SHORT TERM BONDS, MONEY MARKET FUNDS. AT LEAST WE WILL GET MONEY THERE BUT ANYTHING YOU GET ON THE SAVINGS SITE WILL ALWAYS BE LESS THAN THE ACTUAL INFLATION RATE WHICH IS CALLED THE ACTUAL RETURN IS NEGATIVE. HE WILL BE AGGRESSIVE ABOUT IT. JEROME POWELL IS ABSOLUTELY RIGHT. MOST ECONOMIC EXPANSIONS HAVE TAKEN PLACE DURING TIMES OF VERY LOW INFLATION. ONCE YOU GET BACK INTO THE ZONE, THE FED IS BETTING IT WILL PULL TOO HIGH AND START CUTTING RATES PROBABLY IN 2024 AND 2025 TO RETURN TO A NEUTRAL LEVEL WHICH IS PROBABLY JUST WHERE WE ARE NOW BUT NOT ENOUGH TO BRING THE THE INFLATION THEY CONSIDER AS DANGEROUS. >> ON THE HOUSING MARKET, WE ARE SEEING A CHILL, A HOUSING RECESSION, HOW IS INFLATION PLAYING WITH THIS? >> THIS IS A HUGE CHANGE FOR THIS MARKET AND IN A VERY SHORT TIME. EXISTING HOME SALES AS LOW AS THEY HAVE BEEN NOW GO BACK ABOUT SEVEN YEARS OR MORE IF YOU REMOVE THE TWO OR THREE MONTHS JUST WHEN THE PANDEMIC STARTED. PRICES START TO ARRIVE, GENERALLY PRICES DROP 1% TO 2% OVER SUMMER, SUMMER DROP 6%. THERE IS THE OTHER PIECE TO THIS ALSO WHICH IS SOMEONE WHO REFINANCED IN 2021 AND MAY HAVE GOT EIGHT 2.5 PERCENT MORTGAGE THEY WON’T WANT TO MOVE FOR A LONG TIME AS THEY WON’T WANT TO BUY ANOTHER HOME TO TAKE A MORTGAGE WHEN THEY HAVE A 2.5% MORTGAGE. THE HOUSING MARKET IS IN A COUNT AND THAT IS PROBABLY A GOOD THING BECAUSE IT HAS BEEN SO ABNORMALLY HOT FOR SO LONG.

Financial expert Kelly Brothers discusses the impact of the Federal Reserve’s interest rate hike

The Federal Reserve is stepping up its battle to bring down 40-year-high inflation by raising interest rates by three-quarters of a point for the third straight time on Wednesday. Watch the video above as KCRA 3 financial expert Kelly Brothers breaks down the latest developments and what it means for you.

The Federal Reserve is stepping up its battle to bring down 40-year-high inflation by raising interest rates by three-quarters of a point for the third straight time on Wednesday.

Watch the video above as KCRA 3 financial expert Kelly Brothers breaks down the latest developments and what it means for you.

Leslie M. Gill