Wells Fargo Economists Warns Homeowners To Be Prepared. Pending Housing Recession Could Be Worse Than The 1980s!
Wells Fargo economists have issued a warning. They are warning that the pending housing recession could be worse than the Reagan Recession of the early 1980s. Why? Well, for starters, they say the Federal Reserve’s aggressive rate hiking campaign could tip the housing market into a recession that echoes the slowdown of the 1980s.
However, Wells Fargo isn’t alone in expressing this warning. This sentiment has been echoing through financial circles for months.
Mortgage rates are at a multi-decade high and are edging towards 8%.
In the 1980s, the Federal Reserve’s aggressive bid to quell inflation drove the average 30-year fixed rate to as high as 19%.
Freddie Mac reports that the average 30-year fixed-rate mortgage was 7.79% as of October 26.
The Federal Reserve is expected to leave interest rates at a 22-year high of 5.25% to 5.5% this week.
However, officials have signaled they plan to keep borrowing costs at a higher level well into next year. They believe doing so will curb inflation. As a result, this will trigger a decline in construction and activity in the market.