How homebuyers should think about interest rate cuts
Here's what lower interest rates could mean for the housing market.
For prospective homebuyers, the Federal Reserve's latest rate cut may possibly offer some hope. Danielle Hale, Chief Economist, Realtor.com joined TheStreet to talk about what lower interest rates may possibly mean for the housing market.
Related: What interest rate cuts may possibly mean for retirees
Full Video Transcript Below:
CONWAY GITTENS: The Fed just cut rates for the first time in four years. We have got policy makers hinting that more rate cuts are to come back. What impact do you predict this to have on the housing market?
DANIELLE HALE: Yeah so because the Fed normalizes policy, I predict we are going to see mortgage rates decline. That provide a pleasant boost for buyers. It increases their purchasing power or enables them to decrease on the volume of their income that they're putting towards their home home payment. And so that boost housing demand. It also has the prospective to extend housing supply.
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A fine deal of existing homeowners are locked into their current mortgage rate because this is thus a ways below the rates which have been available in the mortgage market. That remains the case that over 1/2 of of owners with a mortgage have a rate this is less than four% so we're no longer likely to totally free up those homeowners every time soon. But every step down in the mortgage rate goes to make a difference for someone who's going which will maneuver forward and not using a longer handiest a house sale, but moreover likely a future home purchase. And it truly is as it'll be going to help make stronger conditions in the housing market.
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