ATLANTA — As inflation continues to cool, the Federal Reserve could finally cut interest rates during its September meeting.
It could provide a window of opportunity for buyers looking to lock in a more affordable mortgage.
If the Federal Reserve slashes the interest rate, mortgage rates will likely dip. That could lead many buyers to re-enter the housing market.
“You might be able to save $100 to $300 each month if interest rates come down by a quarter of a point or all the way to a full point,” said Ted Jenkin, CEO of oXYGen Financial in Atlanta.
He added that people contemplating selling their houses to upgrade to larger homes might be able to do so.
"Also, those people who were thinking about refinancing and took out a higher rate roughly a year ago, that rate, if it comes down by a full percentage point, may allow them to have a slightly lower payment every month,” Jenkin explained.
Jenkin points out that the Fed will likely roll out a series of smaller cuts over the next couple of years. For example, don’t expect to see a big difference right away when it comes to credit cards.
“If your credit card is charging you 22 or 24%. It might come down 1 or 2% on the credit card rate,” he said.
But if you’re shopping for a car, you may be able to lock in a lower rate with smaller monthly payments.
"You may start to see auto loans, at least for people who don’t have great credit, come back into that eight or nine percent ballpark," Jenkin said.
When it comes to retirement savings, Jenkin says consider buying bonds in your 401(k) because as interest rates go down, the value of bonds tends to go up.