Interest rates are most likely coming down in the near future. It will affect many borrowers and investors. Here is what we think you should be paying attention to this fall.
The Federal Reserve has signaled its intention to cut interest rates on September 18, with possible additional cuts this fall. That’s not a 100% iron-clad guarantee of lower rates, but the probability is very high. The federal funds rate is a major influence on all sorts of borrowing costs.
Borrowers who are waiting for lower mortgage rates, or perhaps to refinance a debt, should be on the lookout for opportunities. For example, experts are forecasting the 30-year fixed-rate mortgage rate to drop to around 6.3%. If the Fed continues cutting, these mortgages may go as low as 4.5% by the end of the year.
For investors who are hoping to earn high interest rates on their cash, the future is less rosy. Remember it’s the borrowers of money who pay interest to the savers. Rates on money market funds, government bonds, saving accounts, and CDs are expected to fall as well. That will mean re-assessing whether you are getting the best possible interest rate on your cash. We will do that for you if we manage your money, but for cash held in other accounts, don’t forget to shop around for the best rates from your bank or brokerage. Some interest rates will fall faster than others and it’s worth being aware of your options.
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