MILWAUKEE CO. — The Federal Reserve took emergency action Tuesday over fears that the coronavirus outbreak will hurt the global economy. It slashed interest rates by one-half of a percentage point, putting them between one and 1.25 percent. In the middle of all this economic uncertainty, experts say it’s a chance to save some money, especially if you’re in the market for a new home or loan.
Kayla Bayer has been looking to buy her first home for a few years, but at least one factor has delayed the process — high-interest rates.
"It's impossible almost to buy a home,” Bayer said. "I have student loans and car payments, and a whole bunch of other bills, so adding a high-interest rate on top of that isn't suitable for me."
She may not have to hold off that much longer after the Federal Reserve made a major cut to its key interest rate to boost the economy, as the coronavirus continues to spread worldwide.
Lee Turner with Bell Bank Mortgage said this step could help with cash-flow in the financial market.
"It is a way to keep the economy moving and trying to get ahead of any negative impacts that the coronavirus might have,” Turner said.
He said lower interest rates could increase an already high level of home-buying.
"With these lower rates like this, it makes home affordability much better,” Turner said.
However, Turner said that it could also create a more competitive market for buyers, currently facing an inventory shortage.
The big opportunity, he said, could be for existing homeowners looking to refinance.
"Certainly, somebody that has a higher mortgage, mortgage debt, a higher loan will feel a positive impact more than somebody with a smaller one,” Turner said.
He suggests you consult your mortgage lender or real estate agent to assess your situation, which is exactly what Bayer is going to do.
"It makes me feel hopeful, great, that I could potentially get a home within the next year or two,” Bayer said.
The rates could go down even more. According to economists, emergency cuts like the one announced Tuesday have historically been followed by additional cuts in the near future.