On September 18, the Federal Reserve announced a 0.5% cut in the federal funds rate to a range of 4.75% to 5% due to easing inflation and balanced risks. Experts predict there may be further rate cuts in the future. How will this policy impact loan rates and the real estate market, and how should consumers respond?
Let’s explore the insights and suggestions from Han Sheng Zheng, CEO of Feicheng Hansen Mortgage Company and Elite Real Estate, who has 35 years of experience in the loan industry.
Many may wonder about the direct correlation between the Fed’s rate cuts and housing loan rates. In reality, there is only an indirect connection, not an immediate one. Therefore, housing loan rates will not immediately decrease with rate cuts; there is usually a lag period. It is estimated that it may take one to two months, but this is just an approximation.
The changes in housing loan rates are mainly influenced by the bond market. For instance, despite no rate cuts by the Fed since August, housing loan rates have already decreased. This is due to China’s significant purchase of U.S. bonds in June, which raised bond prices, consequently lowering bond rates and leading to a decrease in housing loan rates.
In comparison to housing loans, commercial loans are more quickly affected by the Fed’s rate cuts. With a decrease in the Fed’s benchmark rate, commercial loan rates typically swiftly follow suit. Especially after the benchmark rate reduction, commercial loan rates immediately decrease, while housing loans require more time. Experts predict the Fed may further cut rates by the year-end.
For consumers hesitant about real estate investment, the rate cuts may present a favorable opportunity. If you’ve been waiting for rate reductions, now might be a good time to consider property investment. Current rates are below 6%, even around 5%, a significant improvement from just a few months ago.
This is good news for the real estate market. Increased property buyers will make property sales easier. Over the past two years, many investors have been cautious due to high rates. With rates decreasing, the market will gradually recover, a trend welcomed by the real estate and loan industries.
If your current loan rate is above 6.5%, consider refinancing as it can save you considerable funds in the long run. Of course, each person’s loan situation varies; some can provide complete tax documents to secure the lowest rates, while those unable to provide tax forms can opt for no-tax return loans, albeit at slightly higher rates.
For small business owners, restaurant operators, or employed individuals unable to provide complete tax returns, loans can be applied for without tax verification, a legal loan process.
Whether you aim to purchase property for residence, investment, apply for loans, refinancing, or liquidating assets for property investments, professional assistance is available. Support is provided for investment property purchases, commercial real estate acquisitions, and business ventures.
Even lawful U.S. visa holders can apply for loans if they meet requirements.
Loan situations are diverse, having encountered various clients over many years, a custom approach can be provided after understanding your specific circumstances, guiding you on optimal decision-making.
For those seeking business transfers, online business listings and sales assistance are offered, primarily focusing on businesses themselves, excluding real estate transactions.
Comprehensive services are provided, including property investigations, all handled by long-term partners, ensuring thorough support.
While no one can predict future trends accurately, the U.S. real estate market is relatively secure for long-term investments. Aside from the 2008 financial crisis, real estate investments usually do not incur significant losses.
In conclusion, rate cuts are advantageous for the market. Each person’s situation varies. If you have any inquiries, feel free to contact for consultation.
Phone: 215-768-7898
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Address: 905 Arch St. #201, Philadelphia PA 19107
Phone: 215-733-0692
Website:
www.hansenmtg.com