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On January 31st, Federal Reserve Chairman Mohamed Mussala stated on Friday that he was reluctant to support further interest rate cuts given that inflation had consistently remained above the Feds 2% target. Mussala said he agreed with the Feds decision this week to keep interest rates unchanged, arguing that the Feds target rate of 3.5% to 3.75% was no longer high enough to significantly dampen the economy. He believes that persistent price increases should prevent the Fed from lowering rates to support the economy. Mussala stated, "Given that inflation is above target and the risks to the economic outlook are broadly balanced, I dont think its appropriate to lower interest rates into an accommodative range at this time." Mussala also pointed out that attempting to alleviate labor market pressures by lowering short-term interest rates controlled by the Fed could be counterproductive. He said such a move could trigger concerns about future inflation and push up long-term interest rates, which are a key factor determining mortgage costs and business borrowing costs.Federal Reserves Mossallem: Economic tailwinds are expected to boost economic growth in 2026.Federal Reserves Mossala: The risk of a sharp decline in the job market has diminished.Federal Reserves Mossalim: Inflation is expected to fall to around 2%, but he believes it may remain above 2% for an extended period. Further rate cuts could exacerbate inflation expectations.Federal Reserve Chairman Mossallem: The economy is expected to continue to grow at an above-trend pace, driven by credit conditions and fiscal policy.

High Mortgage Rates Force First-time Buyers to Rent, According to Rightmove

Aria Thomas

Nov 25, 2022 14:27

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The property website Rightmove (OTC:RTMVY) said on Friday that the demand for rental homes in the United Kingdom surged in October as prospective first-time buyers postponed their purchases owing to rising mortgage rates.


However, the total number of renters and purchasers on the market declined by 1% compared to the same period previous year.


In recent months, mortgage rates in the United Kingdom have risen beyond 6%, increasing after the "mini-budget" of former prime minister Liz Truss on September 23 rattled financial markets.


Since then, rates have fallen due to Jeremy Hunt's Autumn Statement, which guaranteed stamp duty reductions through March 31, 2025.


According to Britain's largest property marketplace, first-time buyers have been significantly impacted by the hike, prompting them to consider renting in the near future while they await the inevitable stability of mortgage rates.


Tim Bannister, a property expert at Rightmove, commented, "It is very understandable why some buyers, especially first-time buyers, are waiting for better financial stability."


Now that there are indicators that mortgage rates are stabilizing, it is probable that they will settle at a higher level than buyers in the past have experienced.


42% of prospective first-time buyers who intend to enter the property market over the next several years have already amassed their entire down payment while awaiting a reduction in interest rates. 43% more were engaged in savings.


Tenants are already facing a large increase in expenses owing to the rising costs of electricity, fuel, food, and council tax, which are reflected in the statistics.


As a result of the highest rate of inflation in 41 years, real wages are decreasing, placing incomes under the most severe pressure in decades.

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