WAUWATOSA, Wis. — The Federal Reserve lowered its key interest rate by half a percentage point on Wednesday. This marks its first rate cut in four years, to ease inflation and boost economic growth.

What You Need To Know

  • The Federal Reserve slashed its benchmark interest rate by a half-point on Wednesday, its first cut in four years

  • The Fed came as close as its been in years to declaring victory over inflation, saying in its statement that it "has gained greater confidence that inflation is moving sustainably toward 2 percent"

  • Danielle Connolly, a realtor with Wisconsin Real Estate Group, said lowering interest rates is a step in the right direction

  • Some experts warned that people who’ve been looking to buy a house for a long time with no luck might not see the impact of the interest rate cut immediately

This is welcome news for many people because it typically means credit card rates will drop a bit and auto loans will get a little cheaper. Lower interest rates also usually boost the stock market.

It could also offer some hope for the challenging housing market because mortgage rates typically drop as interest rates do.

Danielle Connolly, a real estate agent with Wisconsin Real Estate Group, said lowering interest rates is a step in the right direction.

“I think it is a great time to buy,” said Connolly. “I think as interest rates go down, it factors into other things like their loan to debt ratios. With things kind of slowing down in the market, they’re also going to have an opportunity to buy for closer to asking price.”

But some experts warned that people who’ve been looking to buy a house for a long time with no luck might not see the impact of the interest rate cut immediately.

“Fed drops the rate today, mortgage rates will probably come down, but they are probably in the 6% range,” said Dr. Kent Belasco, who is the director of the Commercial Banking Program and Marquette University. “They’re not going to plummet below 3%. That’s not going to happen overnight. This is where you’re going to want to keep an eye on it because the Federal Reserve is signaling that this is the start of rate cuts. So, they are saying, all things being equal, and if it continues to do what they want it to do, the next time after this meeting, they’ll lower the rate again, and likely lower the rate again.”

Belasco, who worked in the banking industry for nearly 40 years, said potential homebuyers may still want to wait and see how the market responds over time, before making a big move.

“Recognize rates are still fairly high and how quick that comes down, we’ll have to see,” he said. “I don’t think it will drop big time yet or that it’s going to turn around the mortgage market.

High home prices due to limited inventory are still a hurdle. Connolly said more houses are gradually coming onto the market, boosting the number of properties for sale.

“We have more inventory now than we did this time last year, so I think that definitely opens up a lot of opportunities for buyers to see homes that they’ve been waiting for,” she said. “A lot of what we’ve been experiencing for the last year is people saying, ‘Oh I am waiting for interest rates to go down,’ or ‘Inventory is not high enough.’ We are finally getting to a point where we are seeing both of those things happen at the same time. Whether this is the right time or not, I think really it is a personal decision that you should talk to your realtor about, and a lender, to make sure everything lines up for you.”

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