The Fed Lowers Interest Rates

The Fed Lowers Interest Rates

Concerns About Interest Rates

The Federal Open Market Committee announced that they have once again lowered the Federal Funds Rate!
 

How does a rate cut impact home buyers and home owners?

The Fed does not directly set mortgage rates; however, mortgage rates are historically low! Home buyers or home owners with specific needs and circumstances could benefit from today's great rates by:
 
  • Buying a new home with the increased purchasing power that comes with lower interest rates.

  • Refinancing to eliminate mortgage insurance or to get a lower interest rate.

  • Consolidating debt.

  • Financing home renovations.

  • Leveraging home equity to fund educational or other major expenses.

What does the Fed rate have to do with the housing market and economy?

  • The Fed does not decide mortgage rates, but it can indirectly influence them since the Fed's decision is based on driving a healthy economy.

  • Mortgage rates are hard to predict and are more closely tied to mortgage backed securities, but the Fed rate can impact adjustable rate mortgages and home equity lines of credit.

  • Short - term debt (like credit cards) typically see an impact when the Fed makes rate adjustments.

  • Lowering the rate to 1.75 - 2.00% supports the Fed's mission to foster maximum employment and price stability.

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