Big news from the Fed this week—they just cut interest rates by 0.5%. It’s the first drop in more than four years, and while most of us saw it coming, there was still some buzz around whether it’d be a smaller 0.25% cut or the full 0.5% they went with.

Now, if you’re wondering how this impacts you: while the Fed rate doesn’t directly impact mortgage rates, it definitely sets the stage. Mortgage rates have already been sliding down in anticipation, and more cuts are expected down the line.

Just last week, the average 30-year fixed mortgage rate dropped to 6.2%, down from 6.35% the week before—and a big drop from the 7.18% we saw last year. This 6.2% rate is the lowest we’ve had since February 2023, according to Freddie Mac.

 

What does that mean for the housing market?

So, what’s the bottom line for buyers? Rates are lower now, which means you’re already saving compared to earlier this year. But here’s the thing— as rates keep dropping, we might start seeing home prices tick up, especially with the upcoming election cycle and next spring’s market on the horizon.

This could really help ease the gridlock we’ve been seeing. With so many buyers sitting on the sidelines waiting for better rates, a move like this might be the push they need to jump back in. Now could be the perfect time to lock in your rate, snag those savings, and get ahead of any potential price hikes coming down the road.

Chris Heller, president of OJO and co-founder of Agent Advice, explains it perfectly: “When buyers have more purchasing power, it’s a win for sellers too. The more options buyers have, the better it is for sellers who want to move their homes.”

For agents, this is the time to communicate with clients. There’s a sense of urgency in the air—buyers should be acting fast while rates are still low, and sellers need to know that more active buyers means better selling opportunities.

Heller also suggests that agents should stay on top of their relationships. Whether it’s current clients or prospects, it’s critical to keep everyone informed about what’s going on in the market. Be that trusted voice they turn to for guidance.

According to the National Association of REALTORS® (NAR), we could see the average 30-year mortgage rate drop to 5.9% by the end of this year. The Fed is hinting at more cuts to come—potentially another 0.5% this year, and even a full 1% drop by 2025.

NAR’s Chief Economist Lawrence Yun points out, “This half-point cut is likely just the start. We’re expecting six to eight more rounds of cuts through 2025.” He also added that while future cuts might not have as big of an impact because of federal borrowing, lower mortgage rates are already boosting buyers’ purchasing power by around $50,000 for those with a $2,000 monthly mortgage budget. Buyers who were previously priced out may now have a shot at getting back into the market.

 

Homeowners who bought in the last couple of years—when rates were around 7%—could also be looking at a chance to refinance. Lower rates mean potential savings, and that’s always a good thing.

Dr. Selma Hepp, chief economist for CoreLogic, sees this trend as an opening for more market momentum. “With rates falling closer to 6%, about 4 million homeowners have a chance to refinance. As the Fed continues to ease, we’ll likely see even more. This could really unlock some of the market’s potential over the next few years.”

Maria Elena Plasencia, sales director for Fortune International Group, also sees Wednesday’s news as a good sign. “The Fed’s cut is a positive step for the real estate market. It won’t turn things around overnight, but with more cuts, we’re moving in the right direction. Buyers could soon have the upper hand.”

 

So, bottom line— with mortgage rates on the decline, now could be a smart time for both buyers and sellers to make their move. Lower rates are on the horizon, and whether you’re buying or selling, now might be the time to jump in. Don’t miss out on the current savings and the chance to get ahead of potential price increases.


For more details, check out the full article on Chicago Agent Magazine.