Many people are concerned about the federal reserve meeting happening in just a few days here in the middle of September; home buyers, home sellers, and agents alike are eager to see if a rate cut announcement will be made or not. If you are considering buying or selling a home soon, you need to know what this means for your decision and how you can go about making the best choice for your future.
The federal reserve affects the interest rates in America because if the Federal Reserve decides to raise the rate, banks across the nation will have to change their lending rates to make up for the funds they will have to borrow from the Reserve. However, while short-term interest rates are directly affected by the fed’s announcement, mortgage rates are long-term and are linked to Treasury yields which are based on future expectations of our economy. As a result, mortgage rates are shifting no matter what the federal reserve announces, although the federal reserve’s actions to play into the long-term economy so it does change mortgage rates eventually.
Interest rates have dropped in the past few weeks, because mortgage lenders are anticipating Federal Reserve cuts, so they’ve preemptively dropped their rates to keep up with competition. The interest rates have also been dropping due to recent economic reports that show that the job market is poor right now, few jobs have been hiring and fewer people have been applying. That report in turn influences the bond market as well as the interest rates, since a poor economy with few job opportunities may cause the Federal Reserve to make cuts to help stabilize and stimulate the economic growth in our nation.
Ultimately, interest rates are always fluctuating, and if now is when you want to buy a home, you should buy one now! Always take your time and ensure that your finances are ready for home ownership, but don’t forget that you date the rate, marry the home. Please reach out to us if you have any questions, we at TVPM and RE are happy to help you achieve your home-owning dreams.