But with lower rates, this dynamic could change. Vice President Kamala Harris’s proposal of a $25,000 rebate for first-time buyers is seen as a positive development, as it addresses the “cash to close aspect.” This, combined with the lowering of interest rates, could help ease the monthly payment burden for many buyers.
“I think the biggest problem for first-time homebuyers in the past two years is that monthly payment rates were so high, which created issues for clients who weren’t comfortable with that monthly payment,” Nguyen explained.
“Sometimes it was actually cheaper for clients to rent than to buy, so with lower interest rates and options for down payment or monthly payment assistance from the government, clients can make a more personal decision.”
Impact on the mortgage industry
Nguyen is pragmatic about the impact lower rates will have on investors. He acknowledges that the reduced interest rates will lower monthly payments, making homeownership more attractive than renting. However, he pointed out that “the rental market has been teeter-tottering” in regions like Tampa Bay, Florida, where rental values have declined slightly after years of sharp increases.
“When interest rates are lower, monthly payments also get lower. So of course, the rental and home ownership markets are going to change; they’re going to fluctuate,” Nguyen says.