This is the news many buyers have been waiting for. On August 23, 2024 the Federal Reserve Chairman, Jerome Powell was giving a speech and said “The time has come to cut interest rates”.
This is great news for home buyers! This should impact mortgage rates and other loans like car loans, giving people a little less interest payments on new loans as soon as the change takes place. Most buyers have been worried about the higher interest rates and for some, the rate increases over the past couple years affected their ability to purchase a home. It will also enable buyers who purchased a new home recently at a higher rate to refinance their current loan if the rates drop low enough to make sense financially to refinance. Talk to your lender if you are thinking about refinancing, there may be fees to refinance and you will be, in most cases, putting your loan back out to the original timeline of 30 years so you want to make sure the savings are worth it.
The overall hope is that the interest rates may get adjusted as early as September. There will most likely be small rate changes to start. You are not going to see interest rates plummet. They need to maintain a delicate balance so they don’t weaken the economy. The Fed is watching the inflation rates ease and unemployment rate rise a little so this is what they needed to see to consider lowering the interest rates for consumers.
There are obviously many factors that contribute and outside influences like things that are happening overseas that the Fed will be watching. So, there is no guarantee. But based on the news I am hearing and the talk in the real estate industry, I predict we will start to see some small rate changes consistently over the next 12-18 months.
The forecasts for 2025 from the National Association of Realtors (NAR), show the average rate being around 6.7% by the end of this year, possibly 6.5% by the end of the 1st quarter in 2025, 6.40% in the 2nd quarter, 6.3% quarter 3 2025. This is very promising for buyers. And Wells Fargo and Fannie Mae are predicting even better numbers of being just under 6% by the end of 2025. These are just predictions, the FED has not announced and confirmed amounts, they will watch the economy closely with any rate change before deciding if they will continue to drop the rates next year.
Inventory still plays a huge part of why our market here in North Central Mass is so strong so it remains to be seen if we will start to see some more houses listed and more inventory become available. More inventory will certainly help buyers in addition to a lower interest rate.
So, if you are thinking of buying or selling a home in the next 12-18 months it is good to know that it looks like the rates will be changing. Talk to a local real estate expert about how that will impact you directly. As always, my column and advice is general information so when it comes to your specific situation, it is good to talk to an expert because every house and every clients needs are different. Call or email me to set up an appointment to discuss your home plans for 2025.
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