Now that the Fed has cut interest rates, the big question is, what does it mean for Middle Tennessee homeowners and builders? And, will rates come down enough to refinance?
NASHVILLE, Tenn. (WKRN) — Now that the Fed has cut interest rates, the big question is, what does it mean for Middle Tennessee homeowners and builders? And, will rates come down enough to refinance?
News 2 talked with two real estate experts about what the cut means for your mortgage payment.
After a slower summer selling season in Middle Tennessee, the Fed’s recent rate cut has been met with applause.
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“The Fed cut was welcome news. First one since 2020,” said Jack Gaughan, VP, member engagement, Greater Nashville Realtors.
Gaughan said lower rates could save you lots of money on your monthly payment. “For those out there who don’t realize the difference between 8% and 5% and 6% in a mortgage interest rate, we’re talking about thousands of dollars saved monthly for a consumer.”
But Gaughan also cautions not to expect mortgage rates to fall perfectly in line with interest rates. “The first thing that people need to realize is that typically just because you hear rate cuts, that doesn’t mean mortgage rates as it relates to the mortgage industry.”
News 2 asked: “A lot of consumers would say, ‘Well wait, my mortgage rates went up for two years as interest rates went up for two years. And so now, hopefully, interest rates will come down for two years and my mortgage rate will as well.’ But, that’s not necessarily the case. Why is that? What other factors play into this?”
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Gaughan answered, “The Fed is the largest indicator of what’s going to happen. But other factors play into it, whether it be supply and demand as far as inventory goes…When we look at the treasury yield, that typically also has a bigger part in it as well just as much as the Fed does.”
“The answer to that is it remains to be seen,” said Jeff Checko, relocation director, Ashton Real Estate Group of RE/MAX Advantage.
Checko said that it’s too early to tell if the Fed rate cut will also bring down mortgage rates for everyday Americans with a 30-year loan. But, for Middle Tennessee home builders and contractors who take out short-term loans tied to the prime rate, this Fed cut offers instant help.
“For builders and short-term speculators that have loan products that are dependent on the short-term rates, it’s an immediate relief,” said Checko.
According to a new RE/MAX study, the number of Greater Nashville homes sold in August fell 6.6% as rates came down a bit and supply went up. The median home price dropped to $450,000.