The Federal Reserve dropped the Federal Funds Rate (the rate charged by banks for overnight loans) by 50 basis points (1/2%) on Wednesday to 1%.  This might seem like good news to would-be home buyers of Charlottesville real estate, but buyers I work with are surprised when I tell them the opposite is true.  I’m often met with a look of disbelief and a refrain that goes something like, “I just heard about a big interest rate cut in the news - how can rates be that high?”

Mortgage Interest Rates Trending Higher!

Well, if you’re borrowing money for one night you’re in luck!  If not, there is cause for concern as lower short term interest rates (especially as low at 1%), can feed the specter and fear of inflation which sends long term interest rates (aka home mortgage rates) higher.  So, it is not surprising that mortgage rates were trending higher on Wednesday afternoon after news of the Fed’s cut.

What do Charlottesville Home Buyers Do?

If you’ve been on the fence about a Charlottesville home purchase, now might be the right time to lock your loan rate and start searching for your Charlottesville home in earnest.  Mortgages rates have been volatile in recent months (for all the reasons you’ve already heard about in the news), and they may trend down again in the future if/when we receive other economic news that suggests inflation isn’t heating up.  But, with all the liquidity the Fed is pumping into the system to prop up the financial services sector, there is real cause for concern about the future of inflation.  The one best mitigating factor is the recent plunge in the price of oil - all bets are off if that trend reverses itself.

Take a Closer Look at the Charlottesville Real Estate Market

For a quick look at what you can afford to buy in today’s Charlottesville real estate market, visit our Chase Team Online mortgage calculator, and if you’re ready to move forward, contact us for references for professional, local lenders who can help you with a mortgage pre-approval letter.  Once you have your pre-approval letter in-hand, you’re ready to take a serious look at the Charlottesville home market and negotiate with a seller.

Until my next post,

Brian

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