The Federal Reserve’s 50-basis-point interest rate cut brought relief to many potential home buyers, but even with mortgage rates starting to fall, some aren’t ready to jump back into the market just yet. Coldwell Banker Realty CEO Kamini Lane joins Wealth! to discuss how the Fed’s rate cuts have impacted the housing market and whether now is the right time for homeowners to consider refinancing. Lane explains that the rate cut was "really well received," especially as the housing market is facing an affordability crisis. She notes that housing affordability is at its lowest rate since 1985. Thus, the Fed’s rate cut helped get some buyers off the sidelines. "A lot of it is psychological, right? People have been waiting to see some movement by the Fed, and they saw that movement. And I think that that is going to spur an increase in affordability, which should loosen supply because we’ve seen that lock-in effect with people who had historically low long-term mortgage rates and were unwilling to give that up. So it should ease that lock-in effect, get more inventory on the market, and that, in turn, will get more buyers on the market," she tells Yahoo Finance. As mortgage rates hover around 6%, Lane notes that it’s still much higher compared to the roughly 3% rate in 2020 and 2021. However, she highlights that the low 6% range is "very much in line with US historical averages." For more buyers to confidently enter the market, she believes interest rates must continue to fall, more inventory needs to be added, and price increases have to stabilize: "I think the combination of all of those factors is what’s going to get buyers off the sidelines. It’s what’s going to address the inventory constraints. It’s going to address the affordability concerns, and it’s going to get the market moving." While many homeowners are considering refinancing now that the Fed has kicked off its rate-easing cycle, Lane explains that refinancing may be for everyone. She explains, "That really depends on the terms of your mortgage, right? Rates have come down, but again, they really aren’t close to the rates that we saw post-pandemic. We have a record number of people who have fixed 30-year mortgage rates that are in those 3 percents. Now, if you have a mortgage and today’s current rates and current terms are better than the mortgage that you have today, then absolutely it’s a great time to refinance. And you know, the reality is, on a $400,000 loan, just one percentage point decrease in your rate is about $250 a month. And that is significant."
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