Peach Tree Times

The Federal Reserve once again raised interest rates in an attempt to avoid a recession and curb inflation. Though the rate hike may lower home prices and decrease demand, it also has the potential to price potential homebuyers out of the market completely and result in higher monthly costs for those who choose to buy. 

"The surge marks the largest weekly increase since 1987. It stands to add to the pressure on U.S. home prices, which remain strong despite rising rates and tumbling affordability," Orla McCaffrey, a reporter for The Wall Street Journal, said.

The move was done as part of the Federal Reserve's "campaign to cool inflation," as reported by The Wall Street Journal. The average rate on a 30-year fixed-rate mortgage has now risen to 5.78% according to mortgage-finance giant Freddie Mac. Just the week prior, the average mortgage rate was 5.23%. This is the largest jump in weekly rates since 1987.

In addition to the rate hike that has made home ownership less attainable for families in Georgia, inflation has also hit a critical point. The consumer-price index has risen to 8.6% in May from the same month a year ago, according to the Bureau of Labor Statistics. This is another record, this time a 40-year high growth rate. 

The Journal reported that the impact of the higher rates is not yet known, since the move is basically unprecedented. However, investors are concerned that it could send the U.S. into recession.

The raise in rates means that homebuyers will be paying an average of $740 more per month to finance a median-priced U.S. home when compared to May of last year, when rates were closer to 3%.

Meanwhile, experts say that the increase in mortgage rates is unlikely to reverse or stall any time soon. Fed Chairman Jerome Powell said that he expects to raise rates another 0.5 or 0.75 percentage points at the Fed's meeting in July. Some lenders are already raising rates to 6% and higher. 

In June, Bankrate.com reported that the going rate for a 30-year fixed mortgage in Georgia is 5.97% now. According to Eric Finnigan, a director at John Burns Real Estate Consulting, the rise in mortgage rates could effectively rule out up to 18 million households from qualifying for a $400,000 mortgage, MarketWatch reported.