NICK GOSNELL
Hutch Post
HUTCHINSON, Kan. — Creighton University economist Ernie Goss sees more cuts coming from the Federal Reserve before the end of 2024.
"Well, I think there's going to be another 50 basis point cuts in total," Goss said. "That'll bring the prime interest rate down to seven and a half percent, that'll bring the funds rate down to four and a half percent. I think they're gonna have to quit that. I think there's too much in inflationary pressures out there right now and we're gonna see it suddenly hit again sometime in 2025, probably the latter part."
Just because the Fed cuts one rate doesn't mean they all come down.
"When the Fed reduced interest rates on this in September, September the 18th, what that did was you saw short-term rates come down but long-term rates actually went up," Goss said. "So mortgage rates, which are tied to long-term rates, went up, so the interest rates on farmland purchases also went up and we're seeing that now."
This is part of why housing prices remain elevated, even in tougher overall economic conditions. Goss quoted Nixon-era economist Herb Stein.
"He said if something can't go on forever, it will stop," Goss said. "This cannot go on forever, but right now it's being supported to a large degree by the builders. The affordability index in terms of housing right now is its lowest level ever. Nationwide we're talking about for spending 40 to 45 percent of your monthly income is going to purchase by a new home buyer, so that's that's way way too high."
An ideal rate for mortgages is no more than 25% of your take home pay.