Who will be hurt when the Fed raises rates?

The choke point for first-timers is not the mortgage payment
  • Until -- if -- mortgage rates rise, nobody is hurt except existing ARM (adjustable-rate mortgages) and home equity borrowers.
  • Young people have a very hard time accumulating a down payment, and income instability is more troublesome to the youth set than income altitude.
  • Mortgage rates are not going to run up unless and until inflation does, and this Fed tightening is pre-emptive of inflation.

So, when the Fed raises rates this time, who will be hurt the worst? First things first: the Fed controls the overnight cost of money, the “Fed funds” rate, not mortgage rates.