The recent decision by the Federal Reserve (the Fed) to lower interest rates by 25 basis points has some potential homebuyers wondering if they should pull the trigger on purchasing a new home.
Contrary to popular belief, the decision by the Fed has little impact on the overall status of mortgage rates. Rates depend on many factors including the housing market itself. The notable exception is for those currently paying on variable rate loans. The decrease of basis points correlates to a drop in variable rate and slightly reduces those mortgage payments.
The news that the recent lowering of interest rates by the Fed has little impact on mortgage rates should not deter you from the positive home buying market. Mortgage rates are under 5% in many cases and the housing market is positioned to give the advantage to the purchaser.
2018 saw enough market volatility to encourage a mortgage rate decrease to an average of 4.5%. These rates appear to be sticking around as economists are encouraged by the growth the adjustment has caused.
The increase of home prices is trending downward, as well. This is encouraging news for those who may have been priced out in previous years. A 6% rise in sales price in 2018 scared off many prospective shoppers but the rate seems to be slowing, with estimates at 4% for this year.
Some markets still suffer from inventory shortages, but the outlook is promising. New home starts are estimated to increase in the near future, providing more opportunities for homebuyers to find a great option.
The time is now for buyers to take advantage of a good market. With mortgage rates holding steady, new inventory, and a stable job market, chances are the purchasing climate will not get much better.