Million Dollar Listing star Josh Flagg revealed that the Federal Reserve’s decision to cut interest rates is “fantastic” news for home buyers.
Flagg, 39, spoke in the wake of Wednesday’s news that interest rates would be cut by 50 basis points, the most in 16 years.
“It’s now cheaper to borrow money and that means people can now afford to buy homes with lower mortgage rates,” he told CNN.
But he warned sellers not to fall into the trap of raising their prices, stressing that lower mortgage rates will not translate into an ability to spend more on property.
“The only thing that wouldn’t make this a good thing is if sellers say, ‘Oh, well, great mortgage rates are cheaper, I can just increase the price of my house’ — 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’re going to think, “The prices have been fair all along and it was just that people couldn’t afford them, but now they can, so let’s keep it at that price.”
“People just need to slow down a bit and not be so selfish. I’m talking about the sellers, and then the buyers will come.”
He added that he hoped the reduction would encourage more homeowners to put their homes on the market because of increased confidence that they would be able to sell them or afford to remortgage.
“Only good things can happen,” the TV star added.
Today’s cut reduces benchmark borrowing costs to between 4.75 percent and 5 percent.
Federal Reserve Chairman Jerome Powell said that as the central bank normalizes interest rates, we should see the housing market normalize.
The Fed’s benchmark rate doesn’t set or directly correspond to mortgage rates, but it does have an important indirect influence, and the two “tend to move in the same direction,” said Jacob Channel, senior economist at LendingTree.
However, Channel cautioned against acting impulsively to take advantage of lower interest rates.
Flagg, 39, spoke in the wake of Wednesday’s news that interest rates would be cut by 50 percentage points, the most 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 compelled to completely change your financial strategy just because rates go down,” he said.
‘Please act with caution and responsibility and do not make hasty decisions based on a single Federal Reserve meeting or economic report.’
Channel said most Americans have mortgages at 5 percent, so rates may have to fall further than their current average of 6.46 percent before many people consider refinancing.
The “Oracle of Wall Street” Meredith Whitney told DailyMail.com earlier this year that rates need to fall below six per cent to revive the frozen housing market.
Brett House, a professor of professional practice in the economics division at Columbia Business School, said a larger-than-expected cut in the benchmark rate could signal the Fed is concerned about the economy.
“It appears that Fed officials are more concerned about growth and employment than they let on,” House said. Underground brick.