BOCA RATON, Fla. — The Federal Reserve approved its first rate hike in more than three years, raising the key interest rate by a quarter of a point.
The move looks to curb inflation that is eating into so many budgets.
But prospective home buyer Jessica Johnson sees it as the cost of doing business.
"I saw the rates go up and I'm like oh well it's still going to be less than what I would pay for these rent increases," she said.
Higher interest rates mean a new mortgage will also get more expensive.
But for Johnson, she said dramatic hikes in rent keep her motivated to buy.
"So, I went and talked to a lender and found out that I could get pre-approved for a decent amount and started looking around," she said.
According to Florida Atlantic University Economist Ken johnson, we're up 1.3% or 130 bases points in a year.
"You're talking about going from roughly 3.2% to 4.4% in one year. So, that's 30 something percent increase in the rate that we're seeing for 30-year fixed-rate mortgages," he said.
Johnson said what's coming next will surprise some.
"When you're looking at 4.3% - 4.4% financing, as opposed to the high 2's that we saw a year and three, four months ago, you're going to see people slowdown in their purchases," he said.
"I think the American dream is still alive and well. It's just going to be a little tougher, Andrew Levy with Echo Fine Properties said.
He said current buyers are facing rate hikes, price hikes that are going up 6%-8% every three months, and a depleted inventory.
"Buyers that see properties that they really love, even if they are anywhere between 10%-20% outside of the norm if they really love it buy it. Jump on it because if they wait and anywhere between 3-6 months it could be anywhere between $50,000 - $75,000 more on a half-million-dollar property," he said.
Jessica said higher rates won't lock her out of homeownership.
"It could go up another point and it still would be cheaper," she said.