Why are interest rates so high?...Like 420 high!

It's no secret that interest rates in the real estate market are currently quite high. With rates hovering around 7.50%, many buyers and sellers are wondering why they are so elevated. In this article, we'll explore why interest rates have reached this level and what factors have contributed to this upward trend.

Firstly, it's important to understand that interest rates are tied to the economy as a whole. When the economy is strong and growing, interest rates tend to increase. Conversely, when the economy is in a recession or experiencing slower growth, interest rates typically decrease. Currently, the economy is experiencing contraction, and runaway inflation which has contributed to the rising interest rates.

Another factor that has contributed to high-interest rates is the Federal Reserve's monetary policy. The Federal Reserve has gradually increased interest rates in an effort to control inflation and stabilize the economy. This has had a direct impact on mortgage rates, causing them to rise as well. Rates are on a 20 year high run with talk of further hikes! YIKES! 

In addition to these factors, geopolitical events and global economic trends can also impact interest rates. For example, a sudden increase in oil prices or tensions between world powers can cause interest rates to rise as investors seek safer investments.

So, why are interest rates currently so high in the real estate market? The answer lies in a combination of factors, including the strong economy (so they say), Federal Reserve policy, and supply and demand dynamics. While high-interest rates can be a challenge for buyers and sellers, it's important to remember that they are a reflection of a growing economy and a stable market.

In conclusion, high rates are here to stay for The foreseeable future. Until we can get this runaway inflation down to a manageable level, around 2%, they will continue to raise rates. I believe rates will stay the same for the next year until we get into the middle of the election cycle. We usually see monetary policy changing within an election period. Stay tuned!