HOUSTON, Texas – As mortgage interest rates start to fall, a wave of eager buyers is preparing to jump back into the market....or are they?
If rates continue to drop, we could potentially see a surge in demand that surpasses even the bidding wars of the COVID pandemic as eager buyers compete for limited inventory.
In September, the United States Federal Reserve announced that it was cutting its benchmark interest rate by 0.5%, an unusually large reduction.
The reason for this substantial cut can be chalked up to milder inflation projections that make the central bank confident that it can shrink the costs of borrowing money. This move is expected to give many Houstonians more flexibility in navigating debt, mortgages, and auto loans.
How these cuts could help Houstonians
For the average Houstonian, entrepreneur and financial expert Mark Madrid sees this as a step in the right direction. He said he spoke to a small business owner in Houston who also believes the cuts will give her more flexibility and less stress.
“[The business owner] said, ‘You know, it means more money in my pocket, and that’s what I desperately need right now.’ We are needing capital access, but we also need management of our household, you know, our assets, the running of the operations,” Madrid said.
“So, this this is not necessarily going to mean that the food on the table the prices decrease, but it will have this effect on interest rates, which affects every part of our lives. It affects where we live, and what we drive. It affects what we’re pulling back and what we’re outlaying in terms of cash.” he continued.
So... Now what?
So now that we’ve heard how these cuts can impact particular elements of Houstonians’ lives, where should we go from here? Mark says that the answer lies in the perspective that you have navigating the situation.
“So I think this is where you become like an Amazon shopper, right? If we know that we want a certain product, and we go out and we see what the choices are, and we assess what’s sponsored and not what our price point is, or we look at the reviews I want to submit for the consideration of public. Keep your eyes and all senses open to opportunities, and you have now more leverage to choose potentially between lending choices.”
On Tuesday, KPRC 2 anchor Andy Cerota is talking to a Houston-area lender about the right timing and what trends could emerge moving forward.