Fed Slashed Interest Rates: Here’s What it Means for Real Estate

Well, it really happened! The Federal Reserve slashed the interest rates for the first time since 2020, bringing the central bank’s benchmark to around 4.8% which is down from a high of 5.3%. This half-point rate slash is a big deal for the economy and will no doubt impact the housing market. Here’s how.

Home Affordability

During the COVID real estate era, mortgage interest rates dropped to an unbelievable 3% for 30-year fixed mortgages. In the past four years that rate has risen up to 8% as inflation also grew. However, in anticipation of the rumored Fed cut, and also the upcoming Presidential election, mortgage rates have dropped to around 5.9%! This is great news for many buyers.

With the rates much lower than this time last year, home buyers may finally be able to afford the homes they have been dreaming of. Yes, home prices are still higher than what many would like, but hopefully these lower rates will offset some of the costs.

According to Chief Economist Danielle Hale with Realtor.com, “These lower rates have not yet induced a big shift in homebuyer and seller activity as home sales still remain sluggish, but they have provided long-awaited relief to homebuyer purchasing power.”

More Homes on the Market

Many sellers have been reluctant to put their homes on the market because they are locked into a higher rate. However, with the rates dropping, and the potential for more cuts in the next few months, sellers may finally be ready to put their property on the market. More inventory would be a welcome change for eager buyers.

By increasing demand and supply, a steadier market forecast could be expected for the Spring. In fact, this rate drop will positively impact builders and investors as well, allowing them to qualify for more projects. This would be great for the supply side of the housing market.

The Upcoming Presidential Election and Interest Rates

Historically, interest rates for mortgages drop before a Presidential election. In fact, Freddie Mac released data that shows that out of the last 11 Presidential election years, mortgage rates decreased from July-November in 8 of them. And with the Fed dropping rates a half percent, this will only fuel the trend of lowered rates before the elections. This means that now may be a great time for buyers to make their move!

Velocity Title Moves Your Business Forward No Matter the Rates

No matter what the rates do, or where the housing market lands, Velocity Title has you covered. Velocity Title supports the real estate industry with a comprehensive line of title services that add value to each and every transaction. With a focus on the best CUSTOMER EXPERIENCE, Velocity Title incorporates leading title TECHNOLOGY and EXPERTISE into every transaction—enabling the final step in the home buying process to be EASY, EFFICIENT and INFORMATIVE. To learn more, visit our website or contact us today!