NewsLocal News

Actions

'It's just frustrating': Rising interest rates strap Milwaukee homebuyers

Posted at 6:34 PM, Jun 17, 2022
and last updated 2022-06-17 19:34:03-04

The head of the Federal Reserve announced it is raising a key interest rate by 0.75% to fight inflation and consumer demand.

"That basically means the cost of borrowing money just became more expensive," said Kevin Spellman, senior lecturer at the University of Wisconsin-Milwaukee.

The rate hike impacts things like credit cards, as well as, home and car loans.

"If fewer people borrow, they spend less money, and that slows the economy and they need to slow the economy enough in order to slow demand in order to get rid of this inflation," explained Kevin Spellman, senior lecturer at the University of Wisconsin-Milwaukee.

Spellman added that everyone is hurting from those who need to borrow money to people who are wealthy and have a lot of money in the stock market, which took a major dive.

Roy Scholtka is nearing 50 years in real estate and owns Coldwell Banker Homesale Realty.

"It's still a good time to buy a house. You might not have as much competition. It's still a good time to sell a house because the houses still have gone up 20% in the last year," Scholtka said.

More people are selling, but the rate increases affect how much people can afford.

"The house you used to pay $400,000 you can afford it at 3%, you can maybe only afford $340,000...$330,000 at 6% so it's going to affect everybody," Scholtka explained.

Ventura Lopez has been looking to buy a home since January.

"We were happy to start looking for a home and now it's just frustrating," Lopez said.

Lopez owns Veva Beauty Bar in Bay View and West Allis. Due to the cost of everything going up and her kids getting ready to move out, Lopez wants to move closer to her busier location, downsize, and save money.

"Keeping the mortgage payments reasonable has been hard because you're not getting a lot of home for your money right now," Lopez said.

Despite that, Lopez remains optimistic they will find the right home.

Spellman said "normally" it takes about a year to see the impact of the Federal Reserve's efforts, but everything seems to be moving quicker than normal so that timeline may change.

Report a typo or error // Submit a news tip