What Impact May Rate Cuts Have?

Fed Rate Cuts Will Have an Effect Across the Board, How Will it Affect You?

The Federal Reserve is expected to cut its benchmark interest rate next month from its 23-year high, which could significantly impact consumer finances, including debt, savings, auto loans, and mortgages. Currently, most experts anticipate three quarter-point cuts by the Fed in September, November, and December, although larger cuts are also possible.


Federal Reserve Chair Jerome Powell stated at the Fed’s annual economic conference in Jackson Hole, Wyoming: “The time has come for the Fed to reduce interest rates. The direction of travel is clear, and the timing and pace of rate cuts will depend on incoming data, the evolving outlook, and the balance of risks.” Based on Powell’s remarks and recent economic trends, a quarter-point rate cut is widely expected next month, with additional cuts to follow.


What Do Rate Cuts Mean for Savers?

Savers should consider locking in attractive yields now, before rate cuts take effect. Greg McBride, Chief Credit Analyst for Bankrate, advises those considering Certificates of Deposit (CDs) or bonds to act quickly: “There is not a benefit to waiting because interest rates are going to be moving lower.” He also emphasized that those nearing retirement have an excellent opportunity to secure CDs at current high rates, ensuring a stable flow of interest income that should outpace inflation.


Impact on Credit Card Debt and Borrowing

Matt Schulz, Chief Credit Analyst at LendingTree, cautions that consumers should not expect immediate relief: “Your credit card bill is not going to plunge the day after the next Fed meeting. Nobody should expect miracles.” While declining benchmark rates will eventually lead to better borrowing conditions, current credit card interest rates remain high, averaging 23.18% for new offers and 21.51% for existing accounts, according to WalletHub’s August Credit Card Landscape Report.


In the short term, Schulz suggests that consumers explore options such as 0% interest balance transfers, low-interest personal loans, or negotiating better rates with their credit card issuers.


Mortgage Rate Trends

While the Fed’s benchmark rate doesn’t directly dictate mortgage rates, the two often move in tandem. LendingTree Senior Economist Jacob Channel notes that mortgage rates have already shown signs of declining ahead of the Fed’s anticipated rate cuts. This shift has sparked interest among homeowners considering refinancing.


Melissa Cohn, Regional Vice President of William Raveis Mortgage, highlights that many who locked in mortgage rates over the past 18 months at higher levels are now evaluating the potential savings of refinancing. “The outlook is good, and hopefully that spills into the real estate market, attracting more buyers,” Cohn said. However, with most Americans having mortgages around 5%, rates may need to fall further from the current average of 6.46% to drive significant refinancing activity.


Auto Loans and the Impact of Rate Cuts

For those considering auto loans, McBride notes that while falling rates are welcome news, it remains crucial to shop around for the best deal and aim to make a substantial down payment. He predicts that rate cuts, combined with avoiding a recession, could lower auto loan rates in 2024 for borrowers with strong credit. However, double-digit rates might persist for those with lower credit profiles throughout the year.


Economic Indicators: Inflation and Employment

The inflation rate showed a positive sign last month, with consumer prices rising just 2.9% in July compared to the previous year—the smallest increase in over three years. However, mixed employment data presents a more complex picture. Hiring in July was lower than expected, and the unemployment rate climbed to 4.3%, the highest in three years. These indicators point to a possible economic slowdown, although strong retail sales have helped ease recession concerns.


The Fed’s pace of rate cuts beyond September will largely depend on upcoming developments in inflation and the job market. As these factors evolve, the central bank will adjust its monetary policy to support economic stability and growth.

Turn Extra Cash into Lasting Legacy: Help Your son/daughter Own a Home!

April 28, 2025
Helping Your Child Buy a Home: Smart Strategies with Tax Benefits  Many parents want to help their children buy a home, but doing so in a way that also provides financial and tax advantages is key. Here are a few strategies to consider when assisting your son or daughter with homeownership while maximizing tax benefits. 1. Gifting Money for a Down Payment The IRS allows individuals to gift up to $18,000 per recipient annually ($36,000 for married couples) without triggering a gift tax. If you stay within this limit, your child receives a down payment boost without tax consequences. 2. Loaning Money to Your Child Instead of gifting, you can lend money at the IRS’s Applicable Federal Rate (AFR), which is often lower than traditional mortgage rates. Structuring it as a formal loan allows your child to build equity while you may receive interest income. 3. Co-Signing or Co-Owning the Home Some parents choose to co-sign a mortgage or co-own the home. While this can help secure better loan terms, it also means shared financial responsibility. If you co-own, you may be able to deduct mortgage interest and property taxes on your tax return, depending on usage. 4. Buying the Home as an Investment Property If your child pays you rent, the home could be classified as an investment property. This allows you to deduct expenses like mortgage interest, property taxes, and maintenance. However, rental income must be reported to the IRS. Final Thoughts Every financial situation is unique, and tax laws change. Consulting with a tax professional or estate planner ensures that your support aligns with your financial goals and tax strategy. Helping your child buy a home is a generous step—doing it wisely ensures benefits for both of you.

Using Our Screening Score Sheet for Rental Applications

April 21, 2025
When applying for one of our rental properties, we use a comprehensive screening score sheet to ensure all applicants are held to the same standard. The score sheet evaluates various aspects of your financial stability and rental history, helping the landlord make informed decisions while maintaining a fair and transparent process! Here’s a breakdown of how we assess your application utilizing the screening score sheet: 1. Length of Residency: While longer periods at previous residences typically suggest reliability and commitment, we understand that some applicants may be first-time renters. We welcome first-time renters, and on the screening score sheet, you can assign yourself a "1" under "Length of Residency" if this is your first rental experience! 2. Collections: We review any outstanding collections, including monthly utilities or bills, as well as loans (excluding medical bills). This helps us assess your overall financial responsibility. Your estimated monthly payment for all your loans, utilities and bills is also taken into consideration. 3. Rent-to-Income Ratio (per household): To ensure you can comfortably afford the rent, we require that your monthly income is at least 2.5 times the rent amount. This ratio helps us verify your ability to manage rent payments alongside other living expenses. 4. FICO Score: While there is no specific minimum FICO score, we do take it into account when evaluating your financial health. A higher score indicates a history of responsible credit management. 5. NSF/Late Payments & Landlord Disputes: We look into your rental history to ensure that there are no frequent NSF (non-sufficient funds) or late payments, and that there are no unresolved disputes with previous landlords. Please note that all application charges are non-refundable, and every occupant over the age of 18 must submit a separate application. Our scoring system ranges from 0 to 21, with 15 being the lowest acceptable score. All approvals or denials are ultimately decided by the property owner. We do not operate off a first come first serve basis, so if you are curious about the status of applications prior to applying, please don’t hesitate to call our office! By using our screening score sheet, we aim to create a rental environment where both tenants and property owners can thrive. This score sheet can be found on our site, under the Before You Apply Manual, as well as under “Rental Resources”.

Declutter and Earn: Join the Outdoor Swap Meet at the Downtown Recreation Center in Henderson!

April 16, 2025
Looking to declutter your home while making some extra cash? The outdoor swap meet at the Downtown Recreation Center in Henderson is the perfect opportunity! Whether you’re cleaning out your closets, clearing space in your garage, or finding a new home for gently used toys, books, and clothes, this event is your chance to turn those items into money. Each booth equals two parking spots, and registration is required at least one week in advance. All booths are assigned randomly, ensuring a fair and fun atmosphere for all. Remember, only second-hand items can be sold, so it’s a great way to recycle and give your items a second life. Event takes place April 19th & May 17th! The swap meet opens at 7am, so come early to shop! Admission is free for all ages, making it a perfect outing for families looking to find unique treasures. Ready to get started? Simply register on the City of Henderson website to secure your spot. It’s time to clean out, earn some extra cash, and find something new – don’t miss out on this exciting event at the Downtown Recreation Center!
More Posts