Birmingham realtor and Hoover car dealership react to Federal Reserve rate cut
BIRMINGHAM, Ala. (WIAT) — The Federal Reserve’s decision to cut its benchmark interest rate by a half percentage point on Wednesday will eventually lead to lower borrowing costs for Americans.
The most notable impacts will be home mortgages, car loans and credit card rates. Professor Art Carden, who teaches macroeconomics at Samford University, explained what a half-point rate cut would mean for consumers.
“Half percent rate cut would just make it cheaper to borrow,” Carden said. “So you would expect to see people taking on more debt. People would be buying more cars, buying more houses and probably not be saving as much.”
Before the decision was announced, Birmingham-area real estate agent Gusty Gulas with eXp Realty spoke from his perspective.
“I’m hoping for a half percent interest rate decrease,” Gulas said. “Now the mortgage companies have already priced in at least a quarter point.”
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Gulas also took time to showcase a four-bedroom, two-and-a-half-bathroom home in Jefferson County, which will go on the market Friday for $585,000. He’s noticed mortgage rates have already been trending downwards.
“We’ve already seen an increase in showings,” he said. “We’ve already seen an increase in people that are interested in getting back into the market because the interest rates have been coming down.”
Benton Nissan of Hoover GM Ken Banks explained the impact of the Federal Reserve’s move on how cars are financed.
“All automotive loans are reborrowed fed money,” Banks said. “So if the bank gets to borrow for cheaper, then they get to give it to customers for cheaper.”
Banks said he thinks we’re going to see more specials coming from the automobile industry.
“It doesn’t matter what someone’s offering,” he said. “If it’s a Nissan a Mercedes or whatever, you’ll see more things coming from the manufacturer that offer lower rates.”
Carden tells us what really matters in the long run is productivity growth, something the Fed doesn’t really influence. In that regard, freeing up the markets will be the best course of action to make it easier for people to build new things.
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