Are Interest rates Dropping?

Are Interest Rates Dropping? What New Mexico Homebuyers Need To Know

Mortgage interest rates have been a hot topic this year. With New Mexico home prices increasing, homebuyers have been hoping for a little bit of relief regarding interest rates. Well, it looks like good news is on the way! Interest rates on a 30-year fixed mortgage dropped to 6.62%, a 16-month low, earlier this week as the June employment report came in below expectations. Federal Reserve Chair Jerome Powell also indicated that another rate cut would be possible in September if economic trends continued as they had been. Let’s look at what this could mean for the New Mexico real estate market.

Understanding mortgage interest rates

Interest rates are basically the cost of borrowing money. When you borrow money with loans like car loans, credit cards, or mortgages, the company that lends it to you charges a fee called interest for the entirety of the loan. How much interest is charged varies based on economic factors and is ultimately determined by the Federal Reserve. When interest rates are low, it’s because the economy isn’t doing well, so rates will be lowered to encourage borrowing and spending. However, when the economy is doing well, interest rates rise in an attempt to slow inflation. So, since the economy isn’t great right now, interest rates should continue to drop.

What does this mean for the New Mexico real estate market?

Lower mortgage interest rates mean a lower monthly payment, so since interest rates are dropping, we can expect more homebuyers to jump into the real estate market. With housing becoming more affordable and more buyers feeling comfortable buying a home in New Mexico, that should mean that homes will sell more quickly.

If you’ve been actively looking for a home to buy and haven’t found what you wanted in your price range, you should talk to your lender to see if you can increase your budget. The lower interest rates mean your money goes further, and you might be able to buy something a little bit more expensive. However, it is important to note that historically, home prices tend to increase when mortgage interest rates drop since there is more competition in the buying pool. So, it would be best to act fast to ensure you don’t get priced out of the market.

If you already own a home in New Mexico, keep an eye on how the market picks up in the coming months. If you’ve been thinking of selling, it might be time to put a plan in place and start getting your home listing ready to avoid common turnoffs for buyers. If you want to know the current value of your home, just let us know!

We are here to help with your New Mexico home real estate needs

Overall, it looks like interest rates are dropping and should continue to do so. We will continue to watch what rates do in the upcoming months and keep you informed. If you ever have any New Mexico real estate questions, we are here to help!