Interest rate cuts could benefit home buyers

Published: Mar. 4, 2020 at 5:27 PM CST
Email This Link
Share on Pinterest
Share on LinkedIn

The Federal Reserve cut interest rates Tuesday, and market experts speculate this is a response to a possible economic slowdown because of the coronavirus.

The Federal Reserve lowered short term federal fund rates by half a percentage point.

This could mean lower mortgage rates for those looking to buy a home.

Financial experts say the coronavirus could contribute to a market slowdown and the Federal Reserve might be trying to get ahead of the curve.

"They're trying to cushion the likely slowdown we're going to see in some areas like some businesses are going to have a tough time making sales," said Eugene Graner, Heartland Investor Services.

While adjustments to short term rates don't guarantee anything, they do influence Wall Street's decisions on mortgage rates.

"Even though Fed fund rates don't directly affect mortgages, it indirectly does. It has influence on it. So, you would expect mortgage rates to decline, but just not point for point," Graner said.

This means prime time for home buyers could be around the corner.

"If you're buying a home, this will obviously decrease your payment significantly," said realtor Nathan Seifert.

Seifert says those thinking about buying a home might be propelled to purchase, and more first time buyers could qualify for loans.

This is the fourth time the Federal Reserve has cut interest rates since the beginning of 2019, lowering rates by one and a quarter points.

Seifert says an economic slowdown could also mean lower housing prices, which would favor home buyers as well.