09/19/2024
Big news yesterday with the Fed reducing rates. What does this mean for you? It’s good news. And I’ll explain my understanding of it the simplest way I can.
This all means inflation is easing and borrowing money will be more affordable. Interest rates on things like car loans, credit cards, and home loans will be trending down.
This is much needed relief for consumers because we haven’t had a rate reduction in about 4 years. Inflation and interest rates have been a big point of stress for many households.
Here’s the thing about mortgage rates though, they are forward thinking. Meaning, mortgage rates have already come down over the last few weeks/months in anticipation of the Fed’s announcement of the reduction.
What was surprising to me was the fed lowered rates more than I personally expected. Collective thoughts seemed divided on how much of a reduction the fed would do, but they cut rates 50 bps versus the 25 bps that was on the table. And more cuts are anticipated in 7 weeks when the fed meets again.
My biggest takeaway from this is the fed has a higher confidence level with being on track with inflation than I had previously thought.
Here’s something else noting though… if rates continue to drop over time as expected, demand on homes will be going up in what is still considered a lower inventory market.
Right now mortgage rates are in the very low 6’s, and some programs are in the 5’s. And they will probably be dipping even lower over the rest of this year and into next.
Mortgages may be more affordable, but home prices will most likely be going back up because of demand. So waiting out lower mortgage rates is probably not the best move if that’s your intention. You can always refinance your mortgage if rates lower.
All of this being said, the best time to buy and sell a home has always been whenever you can do so comfortably and when it makes sense for you. My goal is to give you all the relevant information so you can make informed decisions for you and your families.
