"The Federal Reserve acted to ensure that the economy was not decimated by COVID-19 by deploying a zero interest rate policy and buying over $1 trillion in mortgage-backed securities."
"As mortgage rates dropped to historically low levels, a feeding frenzy among prospective homebuyers ensued, leading to a 30% increase in home prices between early 2020 and mid-2022."
"The Fed's unprecedented series of hikes to the Fed Funds rate in an effort to control runaway inflation caused mortgage rates to double in mid-2022, decimating affordability."
"The Senate has proposed the 21st Century Road to Housing Act, which, while well-intended, illustrates the challenges of impacting home affordability and the limits of federal government intervention."
COVID-19 prompted the Federal Reserve to implement a zero interest rate policy and purchase over $1 trillion in mortgage-backed securities, resulting in historically low mortgage rates. This led to a surge in homebuyer demand, causing prices to rise by 30% from early 2020 to mid-2022. However, the Fed's subsequent rate hikes to combat inflation doubled mortgage rates, severely impacting affordability. Many homeowners were locked into low rates, reducing inventory, while a growing population of potential buyers turned to renting. The Senate proposed the 21st Century Road to Housing Act to address affordability challenges.
Read at www.housingwire.com
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