Ken Fisher Discusses the Impact of Interest Rate Hikes on Housing and the Economy

Title screen appears, “Ken Fisher Discusses the Impact of Interest Rate Hikes on Housing and the Economy”

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A man appears on the screen wearing a navy suit, sitting in an office in front of a fireplace.

He begins to speak.

A banner identifies him as Ken Fisher, Executive Chairman and Co-Chief Investment Officer, Fisher Investments.

Ken Fisher doing hand gestures time to time explaining.

Ken Fisher: People worry a lot today about how the Fed's interest rate hikes impact mortgage rates, which then impact housing.

And it's kind of a dual edged sword because it impacts part of it a lot and part of it not so much.

Housing overall, depending on what year you're in, bounces around between about 15 and 17% of GDP.

So, it seems like a lot, but a lot of that is much more stable.

A little bit less than 5% of GDP is what you think of in one form or another as home building and remodelling.

That's the part that's most active and most cyclical.

Ken Fisher: And so therefore that's the part that's vulnerable to the mortgage increase primarily. Mind you, home sales slowdown when the mortgage rate goes up because that increases the monthly that people have to pay when they borrow to buy a home on a mortgage.

And with that monthly going up, it goes outside the bandwidth that some people can afford, and they don't want to buy homes.

And you can see that, and I've talked

about this before in videos, where the housing market for resale of homes and all those things that go with it are actually decreasing.

But it's more strenuously negative, it's more tough, it's more impactful, it's more cyclical on the portion, which is new construction and remodelling.

Ken Fisher: And so, if you think about it, if that drops by, since that total is a little bit less than 5% of US GDP, if that drops by 10%, let's say, well, that's a half a 1% of GDP, which in this economy isn't enough to cause recession.

It is enough to slow things down a little.

Thank you for listening to me.

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