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Feds Cut Interest Rates for the First Time in 4 Years

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In a move that came longer than expected, the Feds decided on September 18, 2024 to lower interest rates. This move marks the first time the Feds lowered interest rates in 4 years (Forbes). 

Federal Reserve Chairman, Jerome Powell, cited his reasons for lowering interest rates: “The U.S. economy is in good shape. It’s growing at a solid pace. Inflation is coming down. The labor market is in a strong pace. We want to keep it there. That’s what we’re doing.”

How Lower Interest Rates Affect Mortgage Rates

A decrease in interest rates is good news for homeowners and those looking to buy a home. Mortgage rates are at their lowest level in 19 months, with a 30-year mortgage loan dropping from 7.2% to 6.2% (source). Lowered rates mean more buying power and more buyers able to afford homes they were once priced out of. A decrease of even one basis point could mean the difference between affording a mortgage and not affording a mortgage.

With talk of the Feds lowering rates even more in November and further in 2025, the question remains: “When is the best time to buy a home?”

Is Now a Good Time to Buy a Home?

With the decrease in interest rates and mortgage rates, now is a good time to buy a home. Whether prospective homebuyers want to wait for lower mortgage rates in the coming months is a personal decision, but when it comes to making a smart decision, The Gamache Team is confident in its claim that now is a great time to buy a home. 

Most people are likely to wait out lower interest rates so competition will be less to compete for the homes on the market. If a prospective homebuyer waits until the spring market, there will be more buyers competing for the same homes which increases prices and leads to bidding wars. 

The current rates bring more buyers into the market, increasing the competition. 

Consider Refinancing in the Future

Buyers who purchase now may be able to refinance their mortgage when rates get to a point that they feel comfortable with. Unlike others who wait for rates to drop before buying a home, current homeowners are already in a home, reducing the stress and hassle that comes with a frenzied market full of buyers ready to outbid, outlast, and outbuy. 

If you can stretch yourself to purchase a home, anticipating lowered rates, you may be in a stronger position to “get the home of your dreams” before someone else does.

Connect with The Gamache Team to Discuss Your Homebuying Needs

If you are considering purchasing a home, contact The Gamache Team to discuss your home buying needs. We have over 50 years of real estate experience and buy and sell property ourselves in the Tri-Valley area. It would be our pleasure to help you become a homeowner. 

How the Newest Fed Rate Hike Could Affect Home Buyers

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The Feds raised the interest rates again today, July 26, by a quarter of a percentage point, the highest in 22 years. (source)

While mortgage rates are influenced by interest rate moves by the Feds, a number of other factors influence mortgage rates, including financial markets, inflation, Treasury yields and a homebuyer’s application-think credit score (source)

Still, the targeted interest rate range of 5.25%-5.50% could have a significant impact on home buyers who may experience higher prices on their loans. 

Feds Show a History of Raising Interest Rates

This is not the first time the Feds have raised interest rates which have now doubled since March of 2022 (source). Looking to the future, the Feds have hinted this may not be the last time they raise rates.

“The Fed left the door open to further rate hikes this year, with Chair Jerome Powell telling reporters in a news conference that additional tightening is possible unless inflation continues to cool rapidly” (source).

Advice to Home Buyers During Interest Rate Hikes

As Realtors and owners of real estate, it’s The Gamache Team’s responsibility to advise our clients on the best course of action to take when the Feds hike interest rates .

Every home buyer is different, and depending on your situation, there will be different solutions. 

However, here is our advice to home buyers during interest rate hikes:

  • Meet with a Realtor to discuss your goals, concerns, and financial status. 
  • Stay put. If the rates are out of your comfort zone, you may want to ride out the rise in rates with the understanding that what comes up, must come down! (or so we hope!) Use this time to work on your credit report and pay down debt so your debt-to-income ratio is more attractive and offers a better interest rate. 
  • Place a larger down payment on the home. Putting more money down will decrease the loan amount and the price you pay for your mortgage.
  • Buy now and plan to refinance when rates go down. If you find the home of your dreams, it may not be there if you wait for rates to go down. By waiting, you will also be competing with other buyers who waited and may lose out to someone else. As well, by waiting a year to buy the home, the home price may have risen, and you are paying more for the home.
  • Shop around for the best rate. Lenders offer different rates, terms, and assistance. Shop around for what works for you.
  • Buy down the rate. Ask your lender if this is a possibility. 
  • Stay positive and informed. The worst decisions are sometimes made in haste or when pressured and frantic. 

Contact The Gamache Team for More Information

The Gamache Team has ridden the wave of the real estate industry for decades. We haven’t seen a market yet that our clients haven’t made it through. Whether you are looking to move to a home in Dublin, Pleasanton, Livermore, or anywhere in between, we can help.

Let’s start with an initial consultation of ways we can support you during the rise in interest rates and put together a plan of action. 

Contact us to start the home buyer’s journey today.

2020 Real Estate Trends Worth Talking About

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While no one can predict the real estate market through a crystal ball, financial experts predict several 2020 real estate trends from which both buyers and sellers can benefit.

Home Prices Predicted to Rise Slowly, But Less Rapidly than 2019

According to Freddie Mac, real estate prices will continue to grow, but less rapidly than they did in 2019. For homeowners, this is good news, as you will still see growth in your equity so if you do decide to sell, you will profit.

Just make sure when you do sell, your home is in top shape to justify an increase in value and you have marketed it and priced it to sell. Using an experienced Realtor® such as The Gamache Team will be in your best interest.

Buyers can expect a competitive market, being able to afford a home and not be outed by outrageous prices and inflated values that disqualified them in previous years.

For buyers who are still out of the price range for their dream home, personal money management expert, Dave Ramsey suggests they

  • Continue to save for a down payment
  • Be realistic about what you can and cannot afford
  • Research other areas
  • Consider buying a fixer upper to take advantage of the lower price increase
  • Take a hard look at what you really want versus need in a home
  • Hire a reputable buyer’s agent such as The Gamache Team to help you get qualified and negotiate a great offer in your best interests

Mortgage Interest Rates Continue to be Low and May be on the Decline

With the trade and tariff war a hot topic, the feds do have room to adjust to a lower interest rate in 2020. Despite the feds holding interest rates at their current levels this week, Kiplinger announced, “If market turmoil develops, perhaps related to trade, then the Fed will likely cut at least once more.”

Lower interest rates are good news for buyers who can afford just a little bit more home or increase their down payment. Sellers will benefit because more buyers will be vying for their home.

In 2020, economist geeks think interest rates will stay around 3.7% for a 30-year mortgage and 3.2% for a 15-year mortgage. (Kiplinger)

Buyers and Sellers Should Contact an Experienced Real Estate Expert Such as The Gamache Team

If you or anyone you know is looking for a real estate expert who can help them sell or buy a home, contact The Gamache Team. Proven experience, excellent negotiating tactics, a vested interest in the neighborhood they live and work in, The Gamache Team has been assisting buyers and sellers with their real estate needs for over three decades.

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