What the Fed Rate Cut Means for You!

 

The Federal Reserve just cut interest rates by 0.5% (half a percent), and they’re expected to cut rates several more times into next year. This is happening because inflation (the rising cost of things) has slowed down, and job growth has been a bit slower.

 

How Does This Affect Mortgage Rates?

Mortgage rates had already started dropping earlier this year, so this rate cut won’t have a huge impact on bringing them down more. Right now, mortgage rates are low, and if you were thinking about buying a home, it’s good news. With lower rates, your buying power has increased. For example, if you were looking at homes with a $2,000-a-month budget for a mortgage payment, you might now be able to afford $50,000 more house than you could earlier this year.

 

Unemployment and Inflation: Why They Matter

One of the reasons for these rate cuts is to help lower inflation and encourage more spending. But here’s the thing: the Fed actually wants unemployment to go up a little. Why? Because when more people are looking for jobs, businesses don’t need to raise wages as much, which helps keep inflation (the cost of everything) lower. That also keeps interest rates from rising too quickly. Core inflation (the cost of things not including food and energy) is something the Fed closely watches to decide whether to raise or lower interest rates. If inflation stays low, it means the Fed might not need to raise rates again anytime soon.

 

What’s Next?

While rates may stay low, the government is borrowing a lot of money, which could make it harder to get loans in the future. So, if you’ve been priced out before because rates were too high, this might be the right time to jump back into the market.

For sellers, this could mean more buyers coming back into the market since people can now afford more with the lower rates.