The Federal Reserve cut interest rates last Wednesday. This is the first cut in quite awhile and is designed to stave off an economic downturn.
How will this affect the real estate market? This will probably not affect the typical buyer with a 30-year mortgage. Their interest rate is already hovering around 4%. This could help buyers with other types of financing such as adjustable-rate loans and commercial loans.
However, lower rates could help buyers with rising house prices. With lower interest rates, buyers may be able to purchase more house than they could last year. Instead of a home in the high $300,000’s, they may be able to afford something in the low $400,00’s. The increase in purchase power is greater than the recent price increases. This can be a great advantage to buyers.
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