Higher interest rates mean potential home buyers will pay more

ATLANTA - Buying a home in Georgia is about to get more expensive. The Federal Reserve raised interest rates Wednesday.

Higher interest rates will mean buying a car, paying down your credit card, and buying a home will cost more.

There is no shortage of houses out there. The number of available homes in Atlanta rose by 25% from January to February. Shaun Smith says they are just getting harder to buy.

"It’s extremely difficult," says Smith, who has been house hunting about a year.

Home buyers like Smith will have to shell out more money. The Fed raised interest rates to 4.9%.

The Federal Reserve raised interest rates on March 22, 2023. (FOX News)

Rohan Ganduri, an assistant professor of finance at Emory University’s Goizueta Business School, says it is going to get more expensive to borrow money from a bank.

"It becomes much more expensive for us to buy a house, to buy an auto," Ganduri said. "Banks are going to contract credit, which means they’re going to be making fewer loans, or they’ll be making loans at much higher interest rates."

Home prices in Atlanta are expected to increase after the Federal Reserve raised key interest rates on March 22, 2023. (FOX 5)

According to real estate firm Redfin, home prices in Georgia rose a little more than 3% in February compared to same time last year.

"It’ll almost cost me an additional $25,000 to $35,000," Smith said. 

Higher interest rates will sideline him from the home buying market.

"It’s making me re-look and re-think if I even have the ability to go into the market to look for a new home," Smith said.

Buying a house will become more expensive after the Federal Reserve raised key interest rates on March 22, 2023. (FOX 5)

The Fed suggests it may be nearing the end of aggressive interest rate hikes. But it still could raise rates if inflation remains high. That means buying a house could get even pricier.