Raleigh businesses, Realtor react to interest rate cuts

RALEIGH, N.C. (WTVD) -- The Federal Reserve announced a half-point interest rate cut Wednesday, marking the first such move in four years.

"I think the Fed is certainly signaling a turning point that they have confidence that the fight against inflation has largely been won and at the same time, concern about weakness not just in the labor market, but if you look at the data on credit cards and late mortgage payments, that's been inching up some as well," said Dr. Steven Allen, a professor of economics at the Poole College of Management at NC State University.

The decision comes following last week's CPI report showed year-over-year inflation at 2.5%, a figure above the Federal Reserve's target of 2%, though markedly lower than previous months. Previously, the Fed has been resistant in moving forward with such moves, and most economists predicted Wednesday's announcement to be a quarter-point cut.

Initially, Wall Street reacted favorably, with the Dow Jones, NASDAQ, and S&P all seeing gains. However, by the end of the trading day, all three indices finished in the red.

High interest rates have served as an obstacle for individuals seeking to borrow money, affecting businesses and consumers.

"It can help decrease the cost of our debt that is with credit cards. It could ease up some credit lines, and banks more willing to open credit lines to us," said Rusty Sutton, owner of The Green Monkey, a bar and retail space on Wilmington Street.

"We had to buy a truck last year and the interest rates were terrible, so I would definitely be refinancing that vehicle," added Courtney Pernell, owner of Bayleaf Market on Six Forks Road.

Both said they believed that lower interest rates could lead to shoppers feeling more comfortable spending disposable income, an important factor as they enter the all-important fourth quarter.

"Every sale in this shop matters. Every sale goes to helping an artist buy their groceries, paying their mortgage. Every sale helps me. I'm sending my son to college," said Pernell.

Sutton added, "If (customers) know they can afford it and the interest rates and the inflation seems to be coming down, I think that's just going to help across the board for all of us."

Sutton said it's been a difficult 12 months for The Green Monkey, pointing to a transition and the costs associated with moving from its longtime home on Hillsborough Street to Wilmington Street, as well as facing perception issues over downtown Raleigh. However, he is confident momentum is changing.

"I think people will say, 'Oh, wow', breathe a sigh of relief, and hopefully we will see effects of it during the fourth quarter," said Sutton.

The housing market has been impacted by high mortgage rates, which have served as a deterrent for individuals seeking to purchase or sell a home.

"People are looking at any kind of relief when they're looking to buy a home if it can drop the mortgage, you know, $20, $30, $40 (a month), that helps. It really does give more of a perception that it's a better time to buy when those rates are lower," said Brandon Duncan, Team Leader at Duncan Prime Realty at Compass, regarding the possibility of further mortgage rate cuts.

According to the Federal Reserve, the 30-year fixed rate mortgage average in the United States is 6.2%, the lowest it has been since February 2023. However, that figure is still elevated compared to rates between 2010 and early 2022, which largely topped out at 5%.

"If you have a fixed rate mortgage, is it enough? Is it really worth the trouble of going through the whole refinancing process," said Allen.

Still, mortgage rates trending downward, combined with signs of home pricing stabilization, could spur buyers to make a move and possibly expand their options.

"(Lower mortgage rates) puts them in a different price bracket. They may jump from $550,(000) to $575,(000) just based on that short-changing number. It gives them more opportunities to buy other homes as well," said Duncan.