Mortgage Professional Says High Rates Could Have an Unexpected Benefit for Homebuyers

On Oct. 28, the Federal Reserve voted to keep the benchmark interest rates where they were, according to a statement from the Board of Governors of the Federal Reserve System. The decision was made after a 10-2 vote. 

In the statement, the Federal Open Market Committee said economic activity continued to expand at a strong pace. “While uncertainty remains elevated owing, in part, to geopolitical developments, domestic spending has been resilient. Productivity growth is strong, and capital investment is robust. Job gains have kept pace with the workforce, and the unemployment rate has changed little.”

However, a lot of people were hoping to see rates change to help offset rising costs, which have become a point of contention in the U.S. Many prospective homebuyers wanted the Committee to lower interest rates, offering some relief for those who remain priced out of the real estate market due to the high cost of housing and high mortgage rates.

But one mortgage pro on TikTok has previously called these high rates a good thing, and she broke down her reasoning for her followers in a post that was made prior to the vote. 

A Mortgage Lender Says High Rates Are a Good Sign

@theonithelender im just gonna say it #homebuying #mortgagerates #buyingahome #homebuyingtips ♬ original sound – Not Ur Daddys

TikToker @theonithelender acknowledged that it was a weird thing to say, but called 7.5 percent interest rates for mortgages a really good sign of our economy. “So the reason that mortgage rates are where they are is that inflation isn’t cooling off,” she explained. “The Federal Reserve has one big job and one big priority, which is to get inflation levels down under 2 percent.” 

She says that the Federal Reserve uses its power to make it harder to borrow money, which typically lowers inflation. That being said, the organization does not directly set mortgage rates.

“So why is this a good sign if you’re trying to buy a house?” she asked. “Because we know they are doing their job.” She says the fact that interest rates remain high means that the powers that be are doing what they are supposed to do: rein in inflation, and once they hit that magic number of 2 percent, homebuyers may see rates drop if the Committee decides to lower the federal funds rate. 

She Says There’s Another Perk for Homebuyers

It may be hard for anyone who is priced out of the market due to these high rates to see them as a good thing, but @theonithelender says that those who can afford to buy a house right now may be seeing some special treatment from sellers.

“I have not seen yet, in the last two weeks, a contract come over in my email without sellers paying buyers’ costs in the form of seller’s credits,” she explained. 

People in the comments seemed less upset over the rates themselves and more worried about the actual prices of the homes on the market. “True, but a house that was $150,000 seven years ago is now $300,000,” one person wrote.

“Hear me out,” another person added. “Rates stay where they are, and prices come down a ton.”

The Federal Reserve isn’t expected to vote on changing interest rates again until the Dec. 8-9 meeting.