The Federal Reserve lowered interest rates. How this could impact East TN?

KNOXVILLE, Tenn. (WATE) — On Wednesday, the Federal Reserve cut interest rates by half a percentage point for the first time since 2020.

"It will help people who want to open a business because loan rates will be lower," John Fawaz, an East Tennessee financial planner, said. "If you were to invest in a home, rates have gone down to make it more affordable."

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The cut will have a direct impact on those looking to purchase a car.

"You could get a car loan for like two, three percent and, you know, that was the average," Fawaz said. "Now you are looking at eight, nine percent and car prices have gone up a lot."

As for the housing market, Gail Hardy, a realtor with Realty Executives, told 6 News that mortgage rates depend more on the 10 year bond.

"The 10-year bond really is what influences mortgage interest rates, so if you think about where we are versus where we've been, we've actually had some cuts," Hardy said.

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With that being said, the rate cuts will have an indirect impact on the housing market as Hardy believes it could make homes more affordable.

"They will have more money in their pocket and that will help us you know be able to translate that into their home loan," Hardy said. "In our area housing affordability is a big deal especially in the 200's and 300's and people's expectation is that it will change. I do think we are starting to see homes become a little more affordable. "

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As for what to do with the extra money now that rates are cut, Fawaz gave 6 News the following advice.

"The advice I would say is instead of spending this money, if you refinance and you're saving this money maybe use this money towards paying off some other debt or maybe put it aside in your bank towards investments, or retirement."