KNOXVILLE, Tenn. — Anyone who pays a mortgage or auto loan may soon save money on their interest rates. The Federal Reserve is expected to meet this week and is poised to lower rates.
It’s a highly anticipated move, with some experts expecting the Fed to cut interest rates by either 0.25% or even 0.5%. Experts said it's part of how the Fed hopes to achieve a "soft landing," a plan meant to stop rising prices without tipping the economy.
"If rates are down, the burden of the interest they have to pay is reduced and that puts more money in their pockets," said Rob Barger, the CEO of First Century Bank.
The federal interest rate hasn't been lowered since the COVID-19 pandemic. The Fed will decide on whether to change rates during a two-day meeting.
"The Fed has a hard job when it comes to a balancing act,” said John Vandergiff, owner of Blue Ridge Wealth Planners. “If they cut rates too rapidly, it may launch us into inflation again, and they'd have to raise those interest rates back up."
Experts said if it goes smoothly, it would be a great time for people to look at their finances. People paying back loans may be able to refinance for a lower interest rate.
"Look at your household finances. Take a look at your mortgage loan, your home equity loan, auto loan, and maybe credit card debt," said Barger.
Lower interest rates could also benefit future homebuyers.
"Those interest rates dropping are going to lower the payments for buyers, making it more affordable for them. And it could actually increase what they are able to afford," said Kaley Katz, a realtor.
However, it is sort of a Catch-22.
"Some people think, ‘I don't want to buy a house yet, I’m going to wait until the interest rates go down, and then the houses will get cheaper.’ But I don't know if that's true,” said Vandergiff.
It's all about supply and demand, so Katz said now is actually a great time to buy a home. Although a lower interest rate could be on the horizon, you want to buy before the bubble bursts.
"The second that bursts and the interest rates drop, the prices of homes are going to go up,” said Katz.