Fed rate hike impact

The Federal Reserve’s decision this week to hike its key rate by a quarter point felt like another rain cloud for Seattle’s housing market amid stubbornly high mortgage rates.

Mortgage rates rise

Since the beginning of the year, the average rate on a 30-year fixed mortgage increased from 6.2% to just below 7% this week, the highest level in more than 18 months.

Mortgage rates predicted

Windermere Principal Economist Jeff Tucker predicted mortgage rates will remain around 7% for the rest of the year, a turn from many economists’ expectations at the start of the year that rates would hover around 6%.

High mortgage costs

For a midtier home with a 20% down payment, the monthly mortgage payment hovers close to $5,000, including insurance and other costs.

Homebuyers struggle

Annamarie Scantland, who with her husband has spent three years weighing whether they can afford a house, said high mortgage rates make home buying feel 'completely out of reach' for them.

“It feels discouraging because it just feels like our future is kind of up in the air in terms of buying a home.”

Inflation pressures

Nikki Dutton, a senior loan officer at CrossCountry Mortgage in Tacoma, noted high gas and grocery prices add to homebuyers’ struggles beyond mortgage rates.

“I think that the experience of having less money, the experience of having to put their groceries on credit cards, that’s the problem, not a quarter-point interest rate hike.”

Long-term gain

Danny Meier, a loan officer with CMG Home Loans in Snohomish, said the Fed’s rate hike could bring 'short-term pain, long-term gain' for the housing market.

“If the rate hike helps get inflation under control, it will amount to 'short-term pain, long-term gain'.”

Sellers face pressure

After two months on the market and three price drops, Kari Nipert’s three-bedroom home in Gig Harbor is still waiting for a buyer.

“It’s just frustrating because I don’t know what to do.”

Market uncertainty

Redfin data shows nearly half of Seattle-area sellers offered concessions from June through August, down from 70% a year earlier, as homebuyers and sellers navigate rising costs.