How the Federal Interest Rate Cut Impacts Rural Homebuyers
Housing markets across the country will likely feel the impact of a recent federal rate cut — and that includes rural communities.
But with a variety of unique economic drivers at play, people living and looking to live in these communities should plan ahead as they navigate this changing landscape.
What Potential Buyers Should Know
In September, the Federal Reserve announced a quarter-percent cut to its target rate, marking the first time it’s done so all year. So, what does that mean for homebuyers?
While a variety of factors impact interest on home loans, it signals that rates will likely begin to decline slightly in coming months and into 2026.
Dr. Megan Roberts, our economist at Compeer, says the cut represents an opportunity for buyers to secure better rates in the near future.
At the same time, rates can still be volatile. Roberts emphasized that buyers should ultimately focus on the monthly costs they can afford right now to determine when and what to buy.
“I really recommend to anyone thinking about entering the rural home market that they focus on what they're comfortable with at today's rates and today's home buying prices,” Roberts said. “Because this is an evolving situation.”
At Compeer Home, we also offer buyers flexibility with our one-time interest rate adjustment option. If rates do decrease, homeowners can adjust their rate without hefty traditional refinancing costs.
What It Means for the Market
Roberts noted that buyers have benefited from a “warm” market over the past year. That’s because markets have largely slowed down following a period of fierce competition in the immediate aftermath of the COVID-19 pandemic.
With less competition, buyers have more weight when putting in offers on potential homes.
“At that time, it may have been challenging for home buyers to get into the market because things were moving very fast,” Roberts said. “Now that the market has slowed a bit since then, it might represent an opportunity for buyers.”
As interest rates drop, buyers may possibly see things pick up again.
How Rural Communities Are Faring
Outside of the housing market, Roberts says the rate cut reflects several shifts taking place across the broader economy, including changes in the labor market. While unemployment rates have remained relatively steady, job growth has slowed, which prompted the Federal Reserve to take a more moderate approach.
But when it comes to rural economies, the news doesn’t paint the full picture. In fact, the Federal Reserve only looks at the non-farm unemployment rate when considering interest rates.
The agricultural industry faces its own unique challenges today, including lower profits on crops. Of course, rural communities are complex, and other industries will also have an impact on the people living and working in them.
Still, factors like unemployment do have an impact on housing demand and lending in rural areas. That’s why having a partner who specializes in rural lending like Compeer Home can be helpful to buyers in these areas.
“One thing that I really like about Compeer Home and getting to work here is we've got this expertise in rural living and rural lending,” Roberts said. “This is a team that lives and works in the same communities that clients might be looking to buy in.”
As the economic landscape continues to evolve into the new year, buyers should work with a trusted partner to find a course of action that works for them. At Compeer Home, we’re committed to working with buyers through every step of the process, helping them find the right loan to make their rural living dreams a reality.
