{"id":177604,"date":"2024-09-18T14:33:31","date_gmt":"2024-09-18T20:33:31","guid":{"rendered":"https:\/\/www.biggerpockets.com\/blog\/?p=177604"},"modified":"2024-09-18T14:36:37","modified_gmt":"2024-09-18T20:36:37","slug":"federal-reserve-cuts-rates-for-first-time-since-2020","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/federal-reserve-cuts-rates-for-first-time-since-2020","title":{"rendered":"Federal Reserve Cuts Rates By 0.50%, a Bigger Cut Than Expected"},"content":{"rendered":"\n

The moment the real estate industry and much of the nation had been anxiously waiting for has finally arrived. <\/span>The Federal Reserve announced <\/span>that<\/span> it is cutting interest rates by 0.50%\u2014the first rate cut since early 2020 and twice as large as the <\/span>quarter-point cut initially expected<\/span>.<\/span> <\/span><\/p>\n\n\n\n

It marks the end of a fraught two years, during which the Fed lifted interest rates to a 20-year high and maintained them to lower inflation and slow an economy that had seen the cost of housing, food, and more spiral upwards. <\/span><\/p>\n\n\n\n

For investors, the more significant rate cut is excellent news. This bold move was caused by the Fed turning its attention to the jobs market\u2014not wanting to cause further employment losses now that they feel inflation is under control.<\/span><\/p>\n\n\n\n

More Cuts to Come<\/span><\/h2>\n\n\n\n

The Fed also projected another half-point rate cut later this year, lowering the central bank\u2019s policy rate to 4.4%. By the end of 2025, they expect rates to be down to 3.4%. <\/span><\/p>\n\n\n\n

The news has already sent stocks surging and will doubtless spark a buying frenzy in the real estate market. Homebuyers and investors know with a degree of certainty that for the first time in two years, even if they buy at a higher rate now, they can <\/span>refinance<\/span><\/a> to a lower rate in 18 months.<\/span><\/p>\n\n\n\n

Flippers and Landlords Can Breathe a Sigh of Relief<\/span><\/h2>\n\n\n\n

Politically, the Biden administration will herald the move as a sign of success against inflation and of better days <\/span>to come<\/span> for borrowers, businesses, and consumers. For <\/span>house flippers<\/span><\/a> and buy-and-hold investors, it means a less-fraught period of borrowing at high rates while renovating homes and higher <\/span>cash flow<\/span><\/a> when buying rentals. However, the news of future rate cuts and the buying activity it will bring could also cause prices to increase.<\/span><\/p>\n\n\n\n

For owners struggling with high mortgage rates, the cuts offer a chance to refinance and cash flow or lower monthly expenses. Rate-locked homeowners who have resisted listing their homes for fear of losing their low rates might now <\/span>be persuaded<\/span> to sell, adding inventory and activity to a stagnant market. <\/span><\/p>\n\n\n\n

The Fed Still Has a 2% Inflation Rate in Mind<\/span><\/h3>\n\n\n\n

\u201cThis decision reflects our growing confidence that within appropriate recalibration of our policy stance, <\/span>strength in the labor market can be maintained<\/span> in a context of moderate growth and inflation moving sustainably down to 2%,\u201d Fed chairman Jerome Powell said.<\/span><\/p>\n\n\n\n

Powell said that the labor market has \u201ccooled from its formerly overheated state\u201d and inflation has \u201ceased substantially\u201d \u2013 a marked difference from previous press conferences, where Powell mostly spoke on concerns about price increases.<\/span><\/p>\n\n\n\n \n

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<\/div>\n\n\n <\/div>\n <\/div><\/div>\n","protected":false},"excerpt":{"rendered":"

It finally happened: Federal Reserve Chairman Jerome Powell announced that the Fed will, in fact, cut rates, ending months of speculation.<\/p>\n","protected":false},"author":613725,"featured_media":175889,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[7383],"tags":[],"class_list":["post-177604","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-economics"],"acf":[],"comment_count":0,"_links":{"self":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/177604","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/users\/613725"}],"replies":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/comments?post=177604"}],"version-history":[{"count":0,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/177604\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media\/175889"}],"wp:attachment":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media?parent=177604"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/categories?post=177604"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/tags?post=177604"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}