While any cost-savings could take several months and even years to fully kick in, some homeowners are ready for a reprieve from high-interest mortgage loans and others are feeling ready to purchase a home.
The Federal Reserve cut interest rates this month for the first time in more than four years — a move that will help lower borrowing costs for consumers and businesses. And while any cost-savings could take several months and even years to fully kick in, some Chicagoans are already feeling relieved and looking to refinance or purchase a home.
“When we bought, it was always our intention to, really, as soon as it made sense, make the move, refinance,” Ian Rempel said. “I was watching the rates come down in anticipation of the Fed cutting. … once it all got official, I was like, ‘Okay, I just need to actually make this call and start getting this going.’”
Rempel purchased a home in Berwyn about three years ago — right before interest rates skyrocketed during the pandemic. His family moved to Riverside in February before his daughter was about to start kindergarten to be near a “school system that we were excited about.”
But moving also meant the family had to say goodbye to their 2%-range interest rate for one at 7.5%. Once Rempel saw the Fed announce a larger-than-usual half-point cut to its key interest rate on Sept. 18, he called a mortgage consultant. He hopes to refinance and lower his monthly payments.
Mortgage rates are influenced by several factors, including how the bond market reacts to the Fed’s interest rate policy decisions. So while the Fed doesn’t set mortgage rates, its policy clears a path for rates to go lower. And even a modest drop can save homeowners and potential buyers a significant amount of money.
Fall is typically a slow time for the housing market as children are back in school and the holiday season starts. This year could be different as the Fed’s rate cut — and plans to implement more cuts later this year — could bring buyers off the sideline and into a market that’s seeing a years-long inventory drought. Still, if you’re on the fence about buying, experts said now might be a good time to act.
“The situation is right for more [home] purchases,” Jody Gerut, mortgage consultant at Prosperity Home Mortgage, said, especially for first-time buyers who can take advantage of additional grants and incentives. “I don’t think that people are benefited at all by waiting, because there’s no certainty in the future by waiting.”Seeing green
The Fed’s lowered its key interest rate to roughly 4.8%, down from a two-decade high of 5.
