It’s been quite a long time since the 2008 financial crisis hit. In fact, this month’s recent announcement on the Federal Reserve’s borrowing rates is the first time since that recession that these rates have been slashed instead of increased. In part, the Fed is lowering interest rates in order to help sustain the longest economic expansion endeavor on record. The Fed has also apparently left it up in the air whether or not they might engaging in future easing.
According to the Fed, “as the Committee contemplates the future path of the target range for the federal funds rate, it will continue to monitor the implications of incoming information for the economic outlook and will act as appropriate to sustain the expansion.”
The rates are in mighty fine shape currently. This means that a lot of current homeowners will be looking to refinance their mortgage, if they haven’t already (the announcement did come a few weeks ago). At the same time, our federal government is calling for even more rate cuts just this week, up to an entire percentage point. As these efforts from the Fed certainly help to open up the seller’s market, now is absolutely a great opportunity to shoot for lower interest rates and/or monthly payments by refinancing your mortgage.
It’s also a great time to buy, as is always the case when prices drop. At the same time, however, outlets like CNBC are reporting a softer market. Newly built homes are slowing in terms of price, and in terms of production. Our housing supply nationally fell 1%, and in Northern Virginia it’s no secret that the overall inventory is massively shrunk. With the incoming surge of jobs from corporate giants like Google and especially Amazon, the market is looking promising if volatile.
Overall, rate cuts and increases help to steer the markets, but the broader impacts of these decisions will need time to play out. According to another report from CNBC, “the CME FedWatch tool is estimating a 95% chance of a 25 basis point cut at the Fed’s meeting in September.” So make sure to keep reading with the Gaetjen Group as we analyze these markets and help you navigate the ramifications of these complex decisions.