How's the Housing Market Going? Depends on Who You Ask

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Market Overview Analysis by Jeffrey Roach covering: . Read Jeffrey Roach's latest article on Investing.com

The post-pandemic economy is treating people very differently, creating a headache for central bankers. The extreme differences can often get traced back to living situations, as renters have a very different experience than homeowners.

One of the Federal Reserve’s tools involves setting the federal funds rate, an interest rate that influences other market rates such as bank loans, CD rates, and mortgage rates. Typically, higher rates will slow the economy and release some of the pressure on consumer prices. But that hasn’t happened, at least not uniformly across the economy nor at the same magnitude as previous years.

Conversely, those with mortgages saved approximately $220 per month on average from refinancing, and recent refinancing activity reached record levels, surpassing even those seen just before the Great Financial Crisis.As millions of Americans took advantage of low rates, homeowners have historically low debt service payments as a percentage of their disposable income, as highlighted in the chart below.

 

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