By now, you’ve probably heard about the Federal Reserve’s recent cut to interest rates. Today my friend Bree joins me again to discuss the immediate impact this development will have on buyers (and by extension, sellers).
This past July, the Fed went forward with a 0.25% rate cut—the first time this has happened in over a decade. As a consequence, mortgage rates are already falling and until recently, they had remained relatively flat. The Fed’s intervention is actually great news for buyers because it means an increase in affordability.
Let’s use an example to further illustrate this point. Say you were buying a $200,000 home this year. Back in January, the fixed rate on a 30-year loan was at around 4.875%. With the recent cut, the 30-year fixed rate is down by a full percentage point: 3.875%.
As recently as this year, your P&I (principal and interest) payment on a $200,000 mortgage would have been $1,058 per month. If you bought a home today at a 3.875% rate, that same payment could get you into a $225,000 home. That’s greater purchasing power for you as a buyer! Given the level of competition in our current market, that 1% rate decrease between January and today could give you the best of both worlds: the ability to buy the house you want and stay within your budget when you do.
If you have any questions or would like more information, please get in touch with me by phone at 614-323-4348 or by visiting me online atVisionRealty.com. I’d be happy to help!