LAS VEGAS (KTNV) — Many Las Vegas residents are stranded and unsure of what to do next after the Federal Reserve announced another 0.75% interest rate hike.
To put this impact into perspective, let’s say you try to buy a house for $450,000, put down a 20% down payment and decide to finance the rest, your monthly payment cost would be around 3 $000. Patrick Casale has been trying to buy a house for 18 months and feels these price hikes are unrealistic.
“I won’t be able to buy a house,” Casale said.
That was Casale’s immediate thought after finding out about rising interest rates. He says he is stuck.
“I’m 61, I’m not in a position where I can turn around and buy a house and pay $4,000, $5,000 a month,” Casale said.
Casale has been looking for accommodation for 18 months. Trying to get out of renting, but he says probably having to pay an extra $1,000 a month isn’t affordable.
“I don’t know where we’re going to find the money, what happens when our economy gets really badly hit in Nevada,” Casale said.
Bryan Feldman, branch manager of a local mortgage team, says the feeling of being stuck in place is felt across the country. He says three interest hikes in one fiscal year are unprecedented, but are needed to help the country fight inflation.
“Rates have been historically low for so long that we’ve all gotten used to it, but there’s something called inflation that has to happen and that’s to offset it,” Feldman said.
He says that in just one year, the price of a monthly mortgage payment has gone up by more than $800. He had 25 clients with loan approvals to buy a home, but in just two weeks more than half of them backed out after putting the numbers into perspective. Many of them, he says, feel stuck, unsure whether to continue renting or buying.
“It affects all of us in the industry and the entire housing market as a whole,” Feldman said.
It’s not just a housing issue, but Mahesh Odhrani, a financial adviser, says it will impact everyone when it comes to borrowing money. At a time when rents are so high and buying a home is unaffordable.
“A lot of people are stuck because they’re not able to make decisions about what they want to do with their finances,” Odhrani said.
While Odhrani says this is necessary to help our economy return to a more stable state, Casale says it’s just too much.
“We are in a unique situation if we don’t wrap this up and stop the bleeding that we will all suffer immensely from,” Casale said.
Feldman says that if you’re planning to buy a house soon, compare the amount you’re paying in rent to the cost of your eventual mortgage payment. it also encourages talking to your loan officer or financial advisor to discuss options.