Interest rates have been lowered. What does this mean for the Lowcountry?

The Federal Reserve lowered interest rates this week with the intent of stimulating the labor economy and freeing up purchasing power for households.

Rates came down by a quarter of a percentage point on Wednesday, now teetering between 4% and 4.25%. It was the first time the Fed lowered rates in 2025, but the nation’s central bank also indicated that another cut could come later this year. It has a stated goal of getting rates down to 2%.

Interest rates play into how households and businesses borrow money. Since they’re imposed on short-term bonds and loans, they shape how people feel about their finances in the short-term. Conversely, mortgage rates tend to fluctuate based on a longer-term economic outlook, said Nick Kristoff, branch manager at CrossCountry Mortgage in Bluffton. They’re not completely separate, Kristoff said, but lower interest rates from the Fed does not mean lower mortgage rates.

“The Fed is basing what they do on the economy. It’s the same data Wall Street looks at … it’s not that it’s completely disconnected,” he said.

The 30-year mortgage rate was 6.26% on Sept. 18 and has been mostly trending downward since January. Mortgage rates have yet to come down after they more than doubled from 3.11% in late 2021 to 6.42% by the end of 2022.

The Fed lowered rates by half a percentage point in September of last year, and two quarter of a percentage point cuts followed in November and December. Mortgage rates dipped slightly to 6.08% following the Fed’s September 2024 rate cut but then started to increase, reaching a yearly peak of 7.04% in January 2025.

The immediate impact lower interest rates will have on the mortgage market, Kristoff said, is psychological.

“It’s a changing of the psyche, of the everyday consumer and buyer becoming more confident about their purchasing power,” he said. “That leads to more conversations and negotiations. More people can get into the conversation. They’re going to be engaged in it, rather than sitting back waiting, huddling down and seeing if things are passively going in the wrong direction.” The employment factor

Fed Chair Jerome Powell said lower interest rates could stimulate job growth in a market where employers seem increasingly reluctant to hire.

Nationally, unemployment has remained relatively flat year-over-year at 4.3%, Powell said, but hiring is slowing down: Employers added an average of 29,000 jobs per month to payrolls for the past three months. Powell said he thinks lower immigration and labor force participation are the driving factors.

A shrinking labor force is also an issue in Beaufort County. Dr. Tony Pollen, one-stop operator and business services lead at the Lowcountry Council of Governments in Beaufort, said that employers in the Lowcountry are eager to hire. It’s the job seekers that aren’t showing up.

“Post-COVID, individuals have found other ways of making a living, when it comes to gig employment, like DoorDash or Instacart,” Pollen said. “If the employer they apply for is not paying what they expect to be paid, they just do their own thing.”

Beaufort County’s unemployment rate reached 4.4% in July, down from 4.6% in July 2024 but up from 2.7% in the same month in 2023. The Beaufort jobs office worked with more than 10,000 job seekers between July of last year and June of this year, Pollen said, including repeat visitors.

Employers in high-demand fields like manufacturing, hospitality and home health care are raising wages and hosting hiring events. But worker expectations have changed since before the pandemic, Pollen said.

“You can’t just walk into an employer and say ‘I want to make $25 an hour,’” he said. “It’s a different type of job seeker than we were seeing pre-COVID.” The housing Market

Powell said activity in the housing sector is “weak.”

In Beaufort and Jasper counties, the median home sale price was $425,000 in August, compared to $225,000 in the same month the year before. The area had 5.1 months of inventory available in August, considered a balanced market.

There’s been an acceptance of the new normal when it comes to mortgage rates, Kristoff said. People are realizing it’s unlikely for rates to return to their post-COVID lows, and if they need to make a major life change, they’re doing it anyway.

“Buyers are more aware of what the currency situation is,” he said. “They might be hoping for rates to improve, but they’re not putting their life on hold.

”The Fed’s move will start conversations mortgage lenders wouldn’t have otherwise had, Kristoff said. Potential buyers should talk to experts about what this could mean for their wallets.

“It’s like asking ‘what exact medication should I be on?’ Well, you need to talk to the doctor to get an exact answer,” he said. “Make a call and find out, because I do think we’re in a period where we’re going to likely see some Fed decreases, and that’s going to spur activity. It’s an appropriate time to start asking questions.”

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