The Fed announced on July 31st that it is lowering interest rates for the first time in a decade. But what does this mean for the real estate market?
First, let’s get a little background on what the Fed actually is. According to its website, The Federal Reserve is “the central bank of the United States. It performs five general functions to promote the effective operation of the U.S. economy and, more generally, the public interest.”
When the Fed makes a decision to lower its interest rates, banks that you borrow money from get a lower interest rate on the money that they are borrowing from the government. The decision isn’t arbitrary, it is researched by economists who conduct research and studies to understand the real estate market and the overall economy.
But what does this mean for you? It means that if you plan on purchasing a home or refinancing your home, mortgage rates are lower than they have been in 10 years. In fact, the average is almost the lowest in recorded history
Housing costs remain high relative to wages, but these lower interest rates help keep overall costs down.
Meanwhile, sellers can still hope to get top dollar for their homes. The lower interest rates on mortgages means that buyers are more likely able to afford the asking prices.
We’ve mentioned this recently in another post, that this year is going to be the best year to sell – particularly now that mortgage interest rates have lowered. Experts say the market will shift from a seller’s market to a buyer’s market in the next year or two.