The current turmoil in the financial market means it could get tougher to purchase a home, particularly if government regulators like the Federal Reserve crack down on banks in the wake of SVB’s collapse. The Fed has also been on a historic rate-hiking regime to keep inflation in check, and most economists expect that to continue.
“If banks are under stress, they might be reluctant to lend,” Treasury Secretary Janet Yellen said Thursday in testimony to the Senate Finance Committee. “We could see credit become more expensive and less available.”
“That could turn this into a source of significant downside economic risk,” she added.
The banking meltdown over the past week leaves more questions than answers. The stunning collapse of two American banks and the loss of investor confidence in Credit Suisse led to wild market swings and put Wall Street on edge.
During CNN’s primetime special, “Bank Bust: Inside the Collapse of SVB,” experts weighed in on how to best understand what’s happening in a rapidly developing and confusing environment for financial institutions.
“I think realistically, from what we’ve heard from the Fed, interest rates likely will continue to rise,” said Vivian Tu, a former JPMorgan trader.
“On top of that, I think a lot of folks are feeling very concerned about, ‘Hey, if I’m saving up for a down payment, is a bank a safe place to put that money?’”
The 30-year fixed-rate mortgage averaged 6.73% in the week ending March 9. A year ago, it was 3.85%.
Freddie Mac is set to release its average weekly mortgage rates at 12 p.m. ET on Thursday.