INDIANAPOLIS — As the Federal Reserve issues its biggest interest rate hike in more than 20 years, Indiana’s housing nonprofits are bracing for a call for more help.
Housing prices have already risen. A report by real estate firm FC Tucker shows that last month the average selling price of a home in central Indiana rose 10.5% since April 2021.
“You see more people who can no longer afford in the market,” said Jim Morris, president and CEO of Greater Indy Habitat for Humanity.
The organization has already received calls from Hoosiers about the new interest rate hike, Morris said.
Housing applications have increased by at least a third since the start of the COVID-19 pandemic, and at the same time Habitat construction costs have doubled, Morris said.
“We were able to absorb it and keep producing, but it took the resilience of the partnerships to do that,” he said.
Experts say when it comes to mortgages, Hoosiers looking for a new home will be hit the hardest, along with homeowners whose monthly payments aren’t fixed-rate.
“That could absolutely factor into people’s decisions on how much house they want to buy, given that they’ll have a bit higher interest payment associated with those monthly payments,” Andrew Butters said. , assistant professor at the IU Kelley School of Business. .
Butters points out that the interest rate hike is aimed at bringing inflation back to normal rates. As people spend less money, he said, Hoosiers could start to see some prices stop rising at a faster rate.
There could be a noticeable difference by the end of the year, he added.
“It certainly affects businesses as well,” Butters said. “Hopefully, as this trickles down to the wider economy, we will see inflation slowing down.”
Habitat for Humanity is not changing the 0% interest rate on mortgages for the families it serves, Morris said. The organization is working with its community partners to ensure enough funds are available to try to meet any increase in demand, he added.
If you would like to donate or get housing assistance through Habitat for Humanity, click here.
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