The Federal Reserve lowered its key lending rate Wednesday for the first time since December, trimming it by a quarter of a percentage point to a new range of 4.00% to 4.25%. The move comes amid signs of a slowing job market.
Mortgage Loan Officer with First Bank, Zack Nelson, said recent economic shifts are already visible in the housing sector.
“Over the course of the past two months, we’ve seen radical improvements in the interest rate market, and unemployment is partially a big reason for that,” Nelson said.
The cut is welcome news for homeowners and prospective buyers. The average 30-year fixed-rate mortgage is now at its lowest point in three years.
“Zoom back two months ago — that average was 7 percent. Right now it’s all the way down around 6.3, so that is a radical improvement in the course of a few months,” Nelson said.
For context, five years ago, the average 30-year fixed mortgage hovered near 3.11 percent. But rates have swung widely since the pandemic.
“In times of normalcy, you don’t see a lot of cuts or hikes,” Nelson explained. “But because it’s been so volatile the past few years, you’ve kind of seen both ends of that.”
Mortgage rates could fall further over the next three months. The Fed has hinted at additional cuts in the months ahead and into the new year.
“If you’re ready right now, it’s a good place to be as a buyer,” Nelson said. “Because if rates continue on this trend downward, it’s going to be a very competitive market shortly.”
Nelson advised potential buyers not to be so hasty in their purchasing process.
“You never want to buy a home on the belief that your rate or payment will be lower,” Nelson added. “And you never want to buy a home just because it’s a good time to buy if you’re not in love with the home.”
Lower rates could bring more affordable financing, but careful planning remains key for anyone looking to enter the housing market.