MADISON COUNTY, Ala. (WHNT) — The Federal Reserve has made its most aggressive interest rate hike in nearly 30 years – and the Federal Chairman says he anticipates more rate increases to try to bring down record inflation to its target of 2%.
Certified Financial Planner Shari Burnum says the U.S. has experienced several decades of growth and the economy simply can’t go up forever.
“People get scared they say ‘oh my gosh, the interest rate just spiked up’,” says ” Investor’s Resource-RFG Advisory CFP CEO Shari Burnum.
Burnum says it’s good that the Fed is slowing down consumerism.
“By them jacking that rate up by that amount, it’s gonna help everybody hands-off. Okay, uncle, I give, I give, I’ll stop,” says Burnum.
Burnum explains, that after years of expansion, low-interest rates and a troubling supply chain helped bring the economy to this moment.
“We’ve got too many people who want stuff…there’s no stuff there…so they can charge higher prices,” says Barnum.
Barnum says the trouble with rising interest rates though, is how it will impact borrowers.
“What they did will be short term: ‘Ow!’ if I’ve got to buy a house or a car…or ‘ow!’ if I got to pay credit cards, but it helps you get into a more responsible position with your money long term,” says Barnum.
Realtor Amanda Howard, CEO of Amanda Howard Sotheby’s International Realty says even as interest rates go up, she expects the housing market in Huntsville to stay stable.
“I was in the market when we had a 12% interest rate and people were still buying and selling homes. There is still a need,” says Amanda Howard.
Howard says the issue going forward is affordability.
“What you could afford, say a $500,000 home in 2020 at a 3% interest rate that was going to be just at $2,000 a month or roughly $2,100. Now, that same affordability today is going to be about $330,000 per home, so it’s quite a big change in the affordability shift,” says Howard.
Right now, Burnum says there’s a delicate dance to stabilize the economy.
“We were looking at an 8.5% inflation rate. And so just to bring that down to say, like, a long term, two to three, which is where we were, you know, that’s going to take some engineering by the Federal Reserve to do that,” says Barnum.
Burnum’s advice is this: if you’re looking to buy anything that you’re not paying cash for, if you can…do it now. She only expects interest rates to keep going up for the foreseeable future.