Million Dollar Listing star Josh Flagg has revealed that the Federal Reserve’s decision to cut interest rates is “fantastic” news for home buyers.
Flagg, 39, spoke following news on Wednesday that interest rates would be cut by 50 basis points, the largest amount in 16 years.
“It’s cheaper to borrow money now and what does that mean? It means people can now buy homes with lower mortgage rates,” he told CNN.
However, he warned sellers not to fall into the trap of raising their prices, stressing that lower mortgage rates do not automatically mean they can spend more money on real estate.
“The only thing that wouldn’t make this positive is if sellers say, ‘Oh, well, mortgage rates are lower, I can just put the price of my house up.’ That’s not going to work and that’s what people are going to immediately think,” Flagg added.
Million Dollar Listing star Josh Flagg has revealed that the Federal Reserve’s decision to cut interest rates is ‘fantastic’ news for home buyers
‘Or they think, “The prices have been reasonable all along and people just couldn’t afford it. But now they can, so let’s just keep the price where it is.”
“People just need to try a little harder and not be so selfish. I’m talking about sellers, then the buyers will come.”
He expects the reduction will encourage more homeowners to put their homes on the market, as they will have more confidence that they can sell their home or take out a new mortgage.
“Only good things can happen,” the TV star added.
Today’s rate cut brings benchmark borrowing costs down to between 4.75 and 5 percent.
According to Fed Chairman Jerome Powell, the housing market will normalize as the central bank normalizes interest rates.
The Fed’s benchmark rate doesn’t directly determine mortgage rates, nor does it match them. But it does have a large indirect influence, and the two “tend to move in the same direction,” according to LendingTree’s Jacob Channel senior economist.
However, Channel warned against impulsive actions to take advantage of lower interest rates.
Flagg, 39, was speaking out following Wednesday’s news that interest rates were cut by 50 percentage points — the largest amount in 16 years
Flagg, pictured with co-star Tracy Tutor, warned retailers not to raise prices in the wake of the cuts
“You shouldn’t feel obligated to completely change your financial strategy just because interest rates are falling,” he said.
“Be careful and responsible and don’t make hasty decisions based on one Fed meeting or one economic report.”
According to the Channel, the majority of Americans have a mortgage at 5 percent, so interest rates may have to fall further than the current average of 6.46 percent before many people will consider refinancing their mortgages.
Meredith Whitney, the ‘Oracle of Wall Street’, told DailyMail.com earlier this year that interest rates need to fall below six percent to revive the frozen housing market.
Brett House, a professor of economics at Columbia Business School, said a bigger-than-expected cut in the benchmark interest rate could signal that the Fed is concerned about the economy.
“It appears Fed officials are more concerned about growth and jobs than they say,” House said. Brick base.