The Federal Reserve Just Announced Another Rate Cut. Here is What It Means for You!

Big news from the Federal Reserve. Another rate cut just dropped. Here is how it could impact your home value and buying power.

The Fed’s Latest Move: Another Quarter Point Cut:

On December 10, the Federal Open Market Committee voted 9 to 3 to lower the federal funds rate by another 25 basis points, bringing it to a target range of 3.5 percent to 3.75 percent. This is now the third rate cut of 2025, following the cuts back in September and October. While everyone expected this, the vote was not unanimous which shows Fed officials are still trying to balance slowing inflation with a labor market that is cooling off a bit. Jerome Powell shared that this cut helps put the economy in a more comfortable spot, but he also reminded everyone there is no risk free path from here. As of now, the Fed is only projecting one more cut in 2026. For context, this puts borrowing costs at their lowest point since 2022 which is something many of us have been watching closely.

What This Means for Home Buyers:

Whenever the Fed lowers rates, mortgage rates typically follow and we are already seeing movement in a positive direction.

More Affordable Payments:
Rates have been trending downward recently and many buyers are already noticing an improvement in their estimated monthly payments. Even a small shift in interest can make a meaningful difference in affordability. Every situation is different depending on credit, loan programs, and lender options, but the overall direction has been encouraging.

More Buying Power:
As rates ease up, your approved loan amount can stretch further which opens the door to more options, better locations, or features that may have been slightly out of reach earlier this year.

A Quick Tip:
If buying is part of your 2025 or 2026 plans, it may be worth exploring your options now so you can take advantage of this momentum while it is here.

What This Means for Home Sellers:

Sellers can also benefit from lower interest rates, and the current environment is shaping up to be very favorable for anyone considering a move.

Higher Buyer Activity:
When rates trend down, more buyers feel comfortable stepping back into the market. This leads to more showings, more online engagement, and more qualified buyers writing offers. For sellers, that means stronger demand and less time sitting on the market.

Stronger Offers:
As affordability improves, buyers tend to submit cleaner and more competitive offers. We often see fewer seller credit requests, stronger earnest money deposits, and in some cases multiple offers on well priced homes. When buyers feel financially stretched, they negotiate harder. When rates ease, the tone of negotiations usually shifts in a seller’s favor.

Price Stability and Value Protection:
Inventory remains tight in many areas and the easing rate environment supports home values. This combination helps sellers maintain their price expectations and reduces the likelihood of needing to make large price reductions.

Move Up Opportunities:
If you are thinking about selling your current home and buying something larger or newer, this market can create better timing. It becomes easier to sell quickly and transition into your next home with less pressure. Even though rates are still higher than the lows from a few years ago, the recent downward movement has created more flexibility for move up buyers.

Better Timing for Preparation:
A more active market also means you may not need to over improve a home to get a strong result. Many sellers are finding that clean presentation, professional photos, and proper pricing go a long way without needing major renovation costs.

Thinking About Selling:
If you have been waiting for the right moment, this could be a great time to review your options. The combination of easing mortgage rates, steady demand, and low inventory is creating an ideal window for many sellers. I am always happy to walk through your neighborhood data with you, review your home’s estimated value, and help you plan the best strategy based on your goals and timeline.

Looking Ahead:

The Fed expects steady moderate economic growth with inflation continuing to move toward their 2 percent target. I will keep monitoring how these updates affect mortgage rates, buyer demand, and the overall direction of the market as we enter the new year. If you would like to talk about how this update fits into your buying, selling, or investing plans, feel free to reply to this email or give me a call. I am always here to go through the numbers with you and help you make the best decision for your situation.

As always, I am here for all of your real estate needs, and I truly appreciate the referrals you send my way. I treat each one with the utmost care, not only because it reflects on me, but because I want you to look good as well!

Wishing you and your family a wonderful holiday season.

- Joshua Vigil

Disclaimer:

This information is provided for general educational purposes only and should not be considered financial or legal advice. Market conditions, interest rates, and lending guidelines can vary based on individual circumstances. Always consult with a qualified lender, financial advisor, or tax professional before making decisions related to financing, investing, or real estate transactions.

Realtor Joshua Vigil
DRE# 01989117
The Hier Advantage Real Estate Sales & Service