Last week, the Federal Reserve cut interest rates for the first time in four years. We're digging into how this will impact the local housing market as part of our “Price of Paradise” series.
We spoke to several experts working to clear up confusion and misconceptions about the recent rate cut.
“Everyone thinks when the fed cuts interest rates, then mortgage rates go down. Unfortunately, that’s not the case,” Jon Howard with Howard Team Loans said.
Howard explained that the rate cut has the quickest impact on short term rates, but there is no direct correlation or equation to know how exactly it will impact long term mortgage interest rates.
With that being said, mortgage rates are trending down and Howard said he thinks they will continue to fall over the next few months.
“Interest rates are finally coming down. A couple of months ago, we were in the 7s, and now we are back in the 5s. That helps buying power a lot,” Howard said.
Lower rates will drive more people to the market to buy a home, but this might increase buyer competition. In turn, this could drive sellers to raise the price on their home.
For those of you already in a home, I asked about refinancing.
Howard said it could be a great option for some, but not everyone. He suggested sitting down with your mortgage professional to go over the numbers and decide if it's a good decision for you.
Meanwhile, Professor J. Edwin Benton from the University of South Florida said these are good changes that will stimulate the Florida housing market overall.
“It can encourage not only people to buy homes, but also people to borrow money to start a business or expand a business so it can have positive economic impacts,” Benton said.
They said now is a good time to reevaluate your finances and sit down with a trusted professional to see what you can do to save money.
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