Beacon Hill condos and rising interest rates

A reader on the Boston real estate blog wondered how rising rates will affect the 2022 Boston condo for sale market

Here’s what is expected today:

Under Chair Jerome Powell, the Federal Reserve is poised this week to execute a sharp turn toward tighter interest-rate policies with inflation accelerating and unemployment falling faster than expected.

The Fed today will likely announce that it will reduce its monthly bond purchases at twice the rate that Powell had outlined just six weeks ago. Those bond purchases are intended to lower longer-term rates, so winding them down more quickly — likely by early spring — will lessen some of the economic aid the Fed supplied after the pandemic erupted last year.

Fed officials are also expected to forecast that they will raise their benchmark short-term rate, which has been pegged near zero since March 2020, two or three times next year. Rate hikes would, in turn, increase a wide range of borrowing costs, including for mortgages, credit cards and some business loans. Just three months ago, the Fed had penciled in barely one rate increase in 2022.

Let’s note where the mortgage rates are today:

Some of the Fed hike might already be priced in, but these rates are still very attractive. I think that any rate starting with a 3 will be attractive to buyers.

But let’s consider the history. Any time rates threaten to go up, or actually do start to rise, it causes Boson condo buyers to hurry up and find a Boston Back Bay condo or Beacon Hill condominium – just to be able to lock in a lower rate. It could means that we could be heading for an early 2022 Boson condo for sale spring market where rising rates actually will create more individuals looing to buy a Boston condo for sale sooner than latter

Boston Beacon Hill apartment renters who are now buyers may think sellers should lower their price to compensate for higher rates will be in for a long wait. Sellers won’t believe…