Rate Cuts Arrive: What Buyers & Sellers Need to Know in 2024

After two long years of aggressive rate increases from the FED, September marked the first sign of relief for homeowners and buyers since March of 2022.

In March of 2022, the FED embarked on a consistent upward movement in the Federal Funds Rate from 0.25% to 5.5%. This gradual increase pushed mortgage rates up, credit card interest higher, and loans on all financed assets to levels we haven’t seen in 20 years.

Home prices have remained relatively sticky and stagnant, meaning buyers have not seen the expected relief some thought they would. We have seen prices in many areas decline year-over-year, seller’s offering more concessions, and now prices are stabilizing as rates have become less volatile. 

So… why should you care? 

Many homeowners have stated they feel "stuck" with their current interest rate, and who could blame them? It would be difficult for anyone to give up a 3% interest rate for a 7.5% interest rate. It is important to remember that of all currently mortgaged homes, 70% have mortgage rates under 5%.

Would be home buyers have seen mortgage rates nearly double from 2020/2021 to 2024 taking many of them out of the market completely and incentivizing more people to rent.

However, with inflation moving in the right direction and with lower interest rates now available we are likely see many buyers return to the housing market.

Mortgage example: 

Nashville’s average home price is roughly $440,000 as of September 2024 with mortgage rates between 6-7% without any concessions or rate buy-downs. To illustrate how drastic this can be for buyers… and for sellers attempting to sell their home, here’s what the difference looked like for new home buyers. 

Monthly payment on a $440,000 at 6% on a 30 year amortization is roughly $2638.

Monthly payment on a $440,000 at 3% on a 30 year amortization is roughly $1855. 

As rates continue to trend downward toward the high 4’s and low 5’s, we’ll see buyers save $350-$500/month in their payment. This is also great news for the seller’s feeling stuck as $2100-$2300 a month is much more palatable than jumping from $1900 to $2600 a month. 

The market appears to be stabilizing around price and affordability, encouraging more consumers to make the move they’ve been wanting to make regardless if they own a home already or not.

Opportunities to refinance are here.

As one of our clients, if you’ve purchased a home in 2023 or 2024, it may be a good time

to start looking at refinance options as this could save you hundreds of dollars in your

monthly payment and with interest on home loans being front loaded, shouldn’t cost you much if anything out of pocket, nor should it affect your equity position by much. 

If you’ve been on the fence about selling your home and want to strategize about the right time to make your move, reach out to us and we’ll help you get a plan in place to make your next move.