By Jim Lee, guest columnist
September Housing Market Update: What the Federal Funds Rate Cut Means for Portsmouth Homeowners and Sellers
As we move into September, all eyes are on the Federal Reserve (the Fed), with widespread expectations that they’ll cut the Federal Funds Rate at their upcoming meeting. This is largely driven by recent signs of cooling inflation and a slowdown in the job market.
“They’re ready to cut, just as long as we don’t get an inflation surprise between now and September, which we won’t.”Mark Zandi, Chief Economist at Moody’s Analytics
But what does this mean for homeowners and potential sellers in Portsmouth, New Hampshire? How will this affect your plans to sell your home with real estate professionals like Ann Cummings and Jim Lee?
Why a Federal Funds Rate Cut Matters for Homeowners
The Federal Funds Rate directly influences mortgage rates, which are also affected by other factors like the economy and geopolitical events. When the Fed cuts this rate, it signals shifts in the broader economy, often prompting mortgage rates to respond accordingly.
Although one rate cut might not cause a dramatic drop in mortgage rates, it contributes to a gradual decline already underway.
“Once the Fed kicks off a rate-cutting cycle, we do expect that mortgage rates will move somewhat lower.”Mike Fratantoni, Chief Economist at the Mortgage Bankers Association (MBA)
And this isn’t expected to be a one-time cut.
“Generally, the rate-cutting cycle is not one-and-done. Six to eight rounds of rate cuts through 2025 look likely.”Lawrence Yun, Chief Economist at the National Association of Realtors (NAR)
The Projected Impact on Mortgage Rates and Portsmouth’s Housing Market
Experts project that mortgage rates will continue to decline through 2025, partly due to these anticipated Fed cuts. The graph below (see graph) shows the latest forecasts from Fannie Mae, MBA, NAR, and Wells Fargo:
This gradual decline in mortgage rates is welcome news for both homebuyers and sellers in Portsmouth. Here’s why:
1. It Could Ease the Lock-In Effect for Current Homeowners
Many homeowners in Portsmouth, like elsewhere, feel locked into their current homes because they secured lower mortgage rates when they bought. With today’s higher rates, the fear of facing increased costs keeps many from selling.
If you’ve been hesitant to sell your Portsmouth home due to concerns about losing a low-rate mortgage, a slight reduction in rates could make selling more attractive. However, experts predict that while this could ease the lock-in effect, it’s unlikely to bring a rush of new sellers to the market.
2. Lower Rates May Boost Buyer Activity
For those looking to buy a home in Portsmouth, lower mortgage rates make homeownership more affordable. A reduction in rates could provide the opportunity many have been waiting for to enter the market.
Should You Sell Your Portsmouth Home Now?
While the Federal Funds Rate cut isn’t expected to lead to drastically lower mortgage rates overnight, it’s part of a broader trend of gradual decreases. If you’re considering selling your home in Portsmouth, the rate cuts could create a more favorable environment. However, timing the market perfectly is never easy.
“Timing the market is basically impossible. If you’re always waiting for perfect market conditions, you’re going to be waiting forever. Sell now only if it’s a good idea for you.”Jacob Channel, Senior Economist at LendingTree
Bottom Line for Portsmouth Sellers
With the Federal Funds Rate cut on the horizon, now could be a great time to start preparing to sell your home. The gradual decline in mortgage rates could open up new opportunities for both buyers and sellers in Portsmouth. When you’re ready to make your move, Realtors Ann Cummings and Jim Lee are here to guide you through every step of the process.
