Fed’s Harker: Higher Rates Contribute to Rising Home Prices

Federal Reserve Bank of Philadelphia President Patrick Harker said higher interest rates are making it more challenging for first-time home buyers by raising borrowing costs and limiting inventory, which is also leading to higher home prices.

Higher rates discourage current owners from listing their homes for sale, which puts a crunch on inventory, Harker said Monday in remarks prepared for a convention in Philadelphia organized by the Mortgage Bankers Association.

According to Harker, “It will take time for Fed rate hikes to be fully felt”, he also sees that the labour market is coming into better balance, not expecting mass layoffs.

Harker mentioned that “Auto strikes, renewed student loans will weigh on the US economy.” He added that he is expecting unemployment rate to rise to about 4%.

Harker also sees fed policymakers are at the point where rates can be held exactly where they are now.