In response to the Federal Open Markets Committee raising interest rates by 25 basis points last Thursday, mortgage rates have risen and mortgage applications have fallen. As the cost of borrowing money increases, fewer people are able to afford a home loan and are instead turning to renting. This is likely to have a ripple effect on the housing market, as potential home buyers put off their plans to purchase a property.

In the short term, this increase in interest rates is likely to cause a decrease in demand for homes and a corresponding decrease in prices. However, it is worth noting that the interest rate is still relatively low by historical standards, meaning that the market is unlikely to experience a sharp decrease in activity.

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