It’s big news in the financing world: As of July 31, the Federal interest rate has been cut by a quarter point, from 2.5% to 2.25%. This is the first time that the Federal interest rate has decreased since 2008, so this change in policy is a major shift and those who finance purchases will benefit from this change. Longer-term loans like mortgages are at their lowest rates in 3 years and variable rate loans like Adjustable Rate Mortgages and home-equity lines of credit could see a rate reduction based on this cut. This historic low will cause significant changes for a lot of people in a lot of industries, from real estate to finance and many more.
But what do these lower interest rates mean for you?
Better Interest Rates For Buyers
Whether you’re looking to buy a new home, car, or other major expense, if you will need financing assistance, now is the time to make that purchase. The average rate on a 30-year fixed mortgage is now 3.70%, the lowest since November 2016. If you lock into a 15- or 30-year fixed rate now, you’ll be in great shape and making lower-than-average payments for as long as you own that home. This is a great opportunity to set yourself and your family up for success for what could be decades.
Great Time To Refinance Your Home
For homeowners, this reduction means that you’re now in a great position to refinance your home at a lower rate. Mortgage rates were already low, and this new Federal cut will only cause your potential interest rate to drop even more. Especially if you’ve purchased in the last two years, you can stand to benefit significantly from refinancing—including cutting your monthly interest payments by hundreds of dollars.
According to a new report, up to 8.2 million 30-year mortgage holders may be able to save at least 0.75% off of their current interest rate by refinancing. Additionally, if you are in a 30-year mortgage, you may want to look into refinancing your mortgage into a 15 year note and build equity in your home at a faster pace. For more refinancing tips, check out our blog on how to take advantage of low interest rates and when it’s time to refinance.
Lower Credit Card Interest Rates
Perhaps the most immediate result of this change for many Americans will be a reduction in variable credit card interest rates. If you don’t pay your cards down to zero every month, this could mean savings in the hundreds of dollars each month depending on how much you owe. This means more cash in your pocket—or an opportunity to pay down those credit cards quickly.
If you’re ready to take advantage of the lowest Federal interest rate in over a decade—don’t hesitate. Contact Park Place Finance today. We can help you buy a new home, refinance your current one, or even add a second property. If you have questions, concerns, or just want to know more about how this Federal interest rate change will impact you and your lending options, let us know. We’re here to help with all of your lending needs.