The Fed held rates: What Does It Mean for You as a Homebuyer or Seller?
The Federal Reserve recently paused its series of rate cuts, indicating that they’re holding off on making any changes to policy at this time. With the uncertain economic outlook, the Fed will continue to monitor data and adjust as necessary, but there’s no clear indication of where things are heading.
So, what exactly did the Fed say?
In its latest statement, the Fed highlighted a “solid” labor market and mentioned that inflation remains “somewhat” elevated. They also emphasized that future decisions will depend on incoming data and the evolving economic picture.
How does this impact mortgage rates?
While the Fed’s decisions don’t directly control mortgage rates, investors had already factored in the likelihood of this pause. In the future, outside factors like geopolitical events and broader economic trends are more likely to influence rate movements.
Is it a good time to make your move?
It’s natural to wonder if waiting for lower rates is the right strategy, but here’s the reality:
- The Fed’s pause doesn’t necessarily mean that rates will drop shortly. Economic factors could push rates up before they come down.
- If you can buy now, you may save money in the long run. Waiting for lower rates could mean paying more for a home, as home prices are expected to continue rising.
- If you’re currently renting, buying a home could be a smart financial move since it allows you to build equity instead of throwing money away on rent.
- The process can start with a simple pre-approval. Getting pre-approved puts you in a great position when you’re ready to jump into the market.
Tools and options to consider:
- Mortgage calculators: These can help you understand the impact of current rates and home prices, allowing you to make an informed decision.
- Rate-mitigation programs: We have options like a hybrid ARM (adjustable-rate mortgage), which offers a lower starting rate and then adjusts after a few years, or fixed-rate buydowns to help manage higher rates.
- HELOCs: If you own a home and want to access cash from your equity, we can explore options like a Home Equity Line of Credit (HELOC) to help fund your next steps.
What if you’re not ready to buy just yet?
Even if you plan to postpone purchasing, now’s a great time to prepare. A qualification consultation or pre-approval can give you a clearer picture of what you can afford, setting you up for success when you’re ready to move forward.
A Quick Note About the Fed’s Actions:
The Federal Reserve controls the federal funds rate and discount rate, which affect the cost of borrowing between banks. After slashing rates to near zero during the 2020 pandemic, the Fed has steadily raised rates to fight inflation. The September 2023 meeting marked the first rate cut since then, with two more cuts in November and December.
Moving Forward
If you’re considering buying, selling, or refinancing, don’t let uncertainty about interest rates hold you back. Various strategies and tools are available to help you navigate the market, no matter where rates stand.