It’s hard to find an affordable home in the United States these days. Even though the average 30-year fixed mortgage is down about a full percentage point over the last year, the median sale price for an existing home is up 3.1%, according to the National Association of Realtors.

But a program in Minnesota might hold one of the keys to fixing the problem, even though it has faced a fair share of controversy.

In 2019, Minneapolis became the first major U.S. city to end single-family exclusive zoning, opening the door for developers to build multifamily buildings on lots where a single-family home used to be. Through a plan known as Minneapolis 2040, the city invited developers to mix up the types of projects across different neighborhoods, including units specifically for affordable housing.

The plan included other reforms, such as the elimination of parking requirements and a priority on designs favoring public transit users, pedestrians and bicyclists.

“If we’re going to put up affordable housing, we don’t just want to house one family. We want to house five or six or eight or 25 families,” said Minneapolis Mayor Jacob Frey, who has overseen the Minneapolis 2040 plan. “We’re allowing for a greater diversity of housing options.”

On the campaign trail, housing has become a front-and-center issue. The economy at large is top of mind for voters, but with 70% of the rise in inflation attributable to the costs of shelter, the debate over cooling price growth is, by proxy, a debate over how to slow housing costs.

Both former President Donald Trump and Vice President Kamala Harris have broadly promised to provide some support for first-time homebuyers, with the Harris campaign offering more details. Harris and her running mate, Minnesota Gov. Tim Walz, want to build 3 million new homes to address the housing affordability crisis.

Trump campaign national press secretary Karoline Leavitt blamed the higher housing costs on the current administration’s policies, as well as an “unsustainable invasion of illegal aliens.” The campaign broadly said Trump’s housing plan involves freeing up federal land for housing and cutting regulations.

It’s been five years since Minneapolis 2040 was passed, and Frey said “the results speak pretty clearly for themselves.”

A Pew Research report noted that between 2017 and 2022, covering the beginnings of the Minneapolis 2040 plan, housing stock grew by 12% in the city, compared to 4% statewide. An NBC News measure of home buying difficulty shows that Hennepin County, where Minneapolis is located, is the second-easiest county to buy a home in compared to the seven counties adjacent to it — even though Hennepin is the most populous county in the state.

The pump looks primed for more homebuilding. Ryan Allen, a professor of urban planning at the University of Minnesota, analyzed 50 years’ worth of filing permits in Minneapolis and found that over the last five years, developers have been filing permits to build in the city at rates two and a half times the yearly average.

“That’s a clear signal of interest and faith in the housing market here on the part of developers,” Allen said.

The endgame is still to make living more affordable in the city. And although there are a number of factors that determine market rates for a home (like amenities, local economy, cultural factors, migration patterns), early signs show Minneapolis’ plan on housing coinciding with lower rents.

In the roughly five years since Minneapolis 2040 was approved, rents across the country surged by 22%, according to Apartment List estimates. The housing market endured a series of unprecedented shocks during that time. The global pandemic dramatically reshuffled where Americans chose to live, followed by a supply chain nightmare and high interest rates that constrained new housing supply and handcuffed many homebuyers to their current homes.

By contrast, rents in Minneapolis fell by 4% in the same five-year period. California Bay Area neighbors San Francisco and Oakland are the only cities with larger populations also to have seen rents decline, according to the Apartment List estimates.

“When you increase the supply to meet that demand, it’s like supply-side progressivism as a political philosophy. You’re able to prevent major jacks in the rent,” said Frey.

But Frey, a Democrat, acknowledges that the plan was hugely controversial. Signs across the city popped up pleading with developers not to “bulldoze my neighborhood.”

In Northeast Minneapolis, a sign in the yard of a single-family home reads “Stop the NE Land Grab,” referring to the northeastern part of the city. The sign now sits across the street from the Solstice Apartments, a new complex that opened in the spring this year. There are 23 units in the building, a fifth of which are certified affordable units, on the same footprint where just one single-family home used to sit. The building has rented all but one unit, meaning there are at least 22 households now sharing the address where just one family used to be.

Cody Fischer is the developer behind it and says the project would not have been possible prior to Minneapolis 2040.

“Absolutely not. It was a combination of zoning and parking requirements. It just wouldn’t have been possible,” Fischer said. He added that it would be an “understatement” to say the plan was a bit controversial. “The folks on the block really did not want this apartment building here.”

Jeremy Wieland, who lives a block up from the development, is one of those people. Wieland worries that the Solstice Apartments, which didn’t come with off-street parking, will make traffic in the area worse.

Wieland said the Solstice project didn’t do enough to listen to neighbors. But, he added, he supported other multifamily buildings in the neighborhood that better fit the “spirit of 2040” — such as buildings with more two-bedroom units instead of one-bedroom units where single tenants are more likely to move in.

“The building over there is in my backyard and I like it, and down there, [the Solstice Apartments] is in my backyard, and I don’t like it. So it’s always going to be about the specific instance,” Wieland said.

Fischer, the developer, said he designed the building to be part of the community, adding that the neighbors’ “worst nightmares” on parking have not materialized.

Environmental groups have also lodged complaints against Minneapolis, arguing that the city needed to do more to prove that increased density of living wouldn’t be harmful. A lawsuit from a group of nonprofits alleged that the city violated the Minnesota Environmental Rights Act by failing to prove that the 2040 plan would not harm the environment. In 2022, a court order halted the implementation of Minneapolis 2040.

The Minnesota state Legislature later passed legislation essentially protecting the plan from lawsuits. Walz, whom Frey said was “committed to the mission” on affordable housing, signed the measure into law in May. Last month, the Minnesota Supreme Court decided not to review the lawsuit, giving the plan a green light to move forward.

With the project gathering steam, and housing under intense national scrutiny, proponents say the Minneapolis experiment illustrates the need for a multipronged approach — with regulations and community engagement just as important as funding and tax breaks.

“We need the market to step in,” said the University of Minnesota’s Allen. “But I would also argue that’s not enough either. We also need to have more active state, local and federal government policies that look to support the housing market.”

The Federal Reserve announced a half percentage point, or 50 basis points, interest rate cut at the end of its two-day meeting Wednesday. And, naturally, some Americans will want to make the most of the central bank’s first rate cut since the early days of the Covid pandemic.

“How quickly the impact of lower rates is felt depends on whether households have variable or fixed financing rates” said Stephen Foerster, professor of finance at Ivey Business School in London, Ontario. Some adjust fairly quickly, others don’t reset at all.

That is, unless you can refinance.

According to a recent report from NerdWallet, 18% of consumers said they planned to refinance a loan once rates go down. The financial services site polled more than 2,000 U.S. adults in July.

While taking advantage of lower rates could make financial sense, there are often other considerations, as well, depending on the type of loan, experts say.  

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For starters, while mortgage rates are partly influenced by the Fed’s policy, they are also tied to Treasury yields and the economy. So, home loan rates may continue to fluctuate.

Further, most homeowners still have a lower rate on their loan than what they could likely get if they were to refinance now — with the exception of those who bought a home within the last two or three years, according to Jacob Channel, senior economic analyst at LendingTree. 

Roughly, 82% of homeowners are locked in at rates below 5%, and 62% have rates under 4%, a 2023 Redfin analysis found.

“There isn’t a universal rule for when people should think about refinancing a mortgage,” Channel said. “Some people will tell you that you shouldn’t think about refinancing until you could get a rate that’s at least 50 basis points lower than what you currently have, others will say that you should wait until you could get a rate that’s 100 or more basis points lower.”

Other factors to consider are your creditworthiness, which will ultimately determine what rate you can qualify for, as well as the closing costs, which typically run 2% to 6% of your loan amount to refinance, according to LendingTree.

“There’s no one-size-fits-all answer to the question of whether or not somebody should refinance their mortgage,” Channel said.

When it comes to credit card debt, the math is a little more cut-and-dried.

Since most credit cards have a variable rate, there’s a direct connection to the Fed’s benchmark. In the wake of the rate hike cycle, the average credit card rate rose from 16.34% in March 2022 to more than 20% today — nearing an all-time high. Those APRs will edge lower now, but not significantly.

No matter what the Fed does, refinancing high-interest credit card debt is a good move, according to Matt Schulz, chief credit analyst at LendingTree.

“A 0% balance transfer card is likely your best choice, assuming you have good enough credit to get one,” he said. “A low-interest personal loan can be a good tool, as well.”

Alternatively, borrowers can call their card issuer and ask for a lower interest rate on their current card. The average reduction is about 6 percentage points, one LendingTree survey found. “That’s like going from 25% to 19% and is way, way more impactful than anything the Fed’s going to do,” Schulz said.

Although auto loans are fixed, the rates on new-car loans will come down with the Fed’s moves.

But for those with existing auto loan debt, refinancing is not a given.

“An auto loan’s interest is weighted more towards the beginning of the loan; therefore, if you’ve had the loan for a year or two, you’ve already paid quite a bit in interest,” said Ivan Drury, Edmunds’ director of insights. “Even though lowering your rate makes the monthly payment less, it could result in paying more interest over the life of the loan.”

In addition, “if you were paying mostly interest, you might not have enough equity — or any — to really leverage the lower rates,” he said, unless you put more cash toward refinancing and take out a smaller loan.

Consumers may benefit more from improving their credit scores, which could pave the way to substantially better loan terms, he said.

Eventually, student loan borrowers with variable-rate private loans may have reasons to consider refinancing as rates come down.

“Borrowers can choose to refinance their loans to take advantage of lower prevailing interest rates or improvements in their credit scores, which can also lead to lower interest rates, or if they want to switch lenders,” said higher education expert Mark Kantrowitz.

However, refinancing a federal loan into a private student loan will forgo the safety nets that come with federal loans, such as deferments, forbearances, income-driven repayment and loan forgiveness and discharge options, according to Kantrowitz. 

And like other types of refinancing opportunities, extending the term of the loan means you ultimately will pay more interest on the balance.

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The Federal Reserve announced Wednesday it will lower its benchmark rate by a half percentage point, or 50 basis points, paving the way for relief from the high borrowing costs that have hit consumers particularly hard. 

The federal funds rate, which is set by the U.S. central bank, is the interest rate at which banks borrow and lend to one another overnight. Although that’s not the rate consumers pay, the Fed’s moves still affect the borrowing and savings rates they see every day.

Wednesday’s cut sets the federal funds rate at a range of 4.75%-5%.

A series of interest rate hikes starting in March 2022 took the central bank’s benchmark to its highest in more than 22 years, which caused most consumer borrowing costs to skyrocket — and put many households under pressure.

Now, with inflation backing down, “there are reasons to be optimistic,” said Greg McBride, chief financial analyst at Bankrate.com.

However, “one rate cut isn’t a panacea for borrowers grappling with high financing costs and has a minimal impact on the overall household budget,” he said. “What will be more significant is the cumulative effect of a series of interest rate cuts over time.”

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“There are always winners and losers when there is a change in interest rates,” said Stephen Foerster, professor of finance at Ivey Business School in London, Ontario. “In general, lower rates favor borrowers and hurt lenders and savers.”

“It really depends on whether you are a borrower or saver or whether you currently have locked-in borrowing or savings rates,” he said.

From credit cards and mortgage rates to auto loans and savings accounts, here’s a look at how a Fed rate cut could affect your finances in the months ahead.

Since most credit cards have a variable rate, there’s a direct connection to the Fed’s benchmark. Because of the central bank’s rate hike cycle, the average credit card rate rose from 16.34% in March 2022 to more than 20% today — near an all-time high.

Going forward, annual percentage rates will start to come down, but even then, they will only ease off extremely high levels. With only a few cuts on deck for 2024, APRs would still be around 19% in the months ahead, according to McBride.

“Interest rates took the elevator going up, but they’ll be taking the stairs coming down,” he said.

That makes paying down high-cost credit card debt a top priority since “interest rates won’t fall fast enough to bail you out of a tight situation,” McBride said. “Zero percent balance transfer offers remain a great way to turbocharge your credit card debt repayment efforts.”

Although 15- and 30-year mortgage rates are fixed, and tied to Treasury yields and the economy, anyone shopping for a new home has lost considerable purchasing power in the last two years, partly because of inflation and the Fed’s policy moves.

But rates are already significantly lower than where they were just a few months ago. Now, the average rate for a 30-year, fixed-rate mortgage is around 6.3%, according to Bankrate.

Jacob Channel, senior economist at LendingTree, expects mortgage rates will stay somewhere in the 6% to 6.5% range over the coming weeks, with a chance that they’ll even dip below 6%. But it’s unlikely they will return to their pandemic-era lows, he said.

“Though they are falling, mortgage rates nonetheless remain relatively high compared to where they stood through most of the last decade,” he said. “What’s more, home prices remain at or near record highs in many areas.” Despite the Fed’s move, “there are a lot of people who won’t be able to buy until the market becomes cheaper,” Channel said.

Even though auto loans are fixed, higher vehicle prices and high borrowing costs have stretched car buyers “to their financial limits,” according to Jessica Caldwell, Edmunds’ head of insights.

The average rate on a five-year new car loan is now more than 7%, up from 4% when the Fed started raising rates, according to Edmunds. However, rate cuts from the Fed will take some of the edge off the rising cost of financing a car — likely bringing rates below 7% — helped in part by competition between lenders and more incentives in the market.

“Many Americans have been holding off on making vehicle purchases in the hopes that prices and interest rates would come down, or that incentives would make a return,” Caldwell said. “A Fed rate cut wouldn’t necessarily drive all those consumers back into showrooms right away, but it would certainly help nudge holdout car buyers back into more of a spending mood.”

Federal student loan rates are also fixed, so most borrowers won’t be immediately affected by a rate cut. However, if you have a private loan, those loans may be fixed or have a variable rate tied to the Treasury bill or other rates, which means once the Fed starts cutting interest rates, the rates on those private student loans will come down over a one- or three-month period, depending on the benchmark, according to higher education expert Mark Kantrowitz. 

Eventually, borrowers with existing variable-rate private student loans may be able to refinance into a less expensive fixed-rate loan, he said. But refinancing a federal loan into a private student loan will forgo the safety nets that come with federal loans, such as deferments, forbearances, income-driven repayment and loan forgiveness and discharge options.

Additionally, extending the term of the loan means you ultimately will pay more interest on the balance.

While the central bank has no direct influence on deposit rates, the yields tend to be correlated to changes in the target federal funds rate.

As a result of Fed rate hikes, top-yielding online savings account rates have made significant moves and are now paying more than 5% — the most savers have been able to earn in nearly two decades — up from around 1% in 2022, according to Bankrate.

If you haven’t opened a high-yield savings account or locked in a certificate of deposit yet, you’ve likely already missed the rate peak, according to Matt Schulz, LendingTree’s credit analyst. However, “yields aren’t going to fall off a cliff immediately after the Fed cuts rates,” he said.

Although those rates have likely maxed out, it is still worth your time to make either of those moves now before rates fall even further, he advised.

One-year CDs are now averaging 1.78% but top-yielding CD rates pay more than 5%, according to Bankrate, as good as or better than a high-yield savings account.

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The Federal Reserve is poised Wednesday to make its first interest rate cut since March 2020. But homeowners shouldn’t bet on the move as an opportunity to immediately refinance their mortgage.

That’s because “a lot of these rate cuts are already priced in,” Chen Zhao, the economic research lead at Redfin, an online real estate brokerage firm, recently told CNBC. 

While mortgage rates are partly influenced by the Fed’s policy, they are also tied to Treasury yields and the economy. Home loan rates have already started to come down in recent weeks, slightly induced in part by favorable economic data and indications the Fed could cut rates.

As of Thursday, the average 30-year fixed rate mortgage in the U.S. was 6.20%, according to Freddie Mac data via the Fed. That’s down from this year’s peak of 7.22% on May 2.

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It can be very difficult to perfectly time a mortgage refinance by looking at mortgage rate activity alone, said Jeff Ostrowski, a housing expert at Bankrate.com.

“It’s almost impossible to figure out what mortgage rates are going to do from week to week or month to month,” Ostrowski said.

Yet there are ways homeowners can determine when a refinance makes the most sense to them, experts say, especially if more rate cuts are slated before the end of the year.

Here’s how to know when it’s time to refinance your mortgage, according to experts.

Refinance activity increased to 46.7% of total applications during the week ending Sept. 6, up from 46.4% the week before, according to the Mortgage Bankers Association.

While there has been an increase in refinances as mortgage rates come down, “compared to the massive refinance boom” in 2020 and 2021, “this is going to be a much smaller wave of refinances,” said Ostrowski.

Most homeowners have a mortgage rate below 5%, said Jacob Channel, senior economic analyst at LendingTree.

A refinance will mostly benefit a “small number of people” who bought homes “when rates were at 8%,” said Ostrowski.

Whether it’s smart for homeowners to refinance their mortgage will depend on factors such as their existing borrowing and repayment timeline, experts say.

If you are thinking about refinancing, look carefully at what’s going on with rates in the market, reach out to lenders and see if doing so now or in the near future makes the most sense for you, Channel said.

“The only person who can decide whether or not refinancing is going to be worth it is you, based on what’s going on in your life,” he said.

Here are three criteria that can help you determine if a refinance makes the most sense to you:

1. You can cut your rate by 50 basis points or more

To know when it makes sense to refinance, homeowners need to see a notable drop in mortgage rates in order to benefit, experts say. The prevailing rate should be at least 50 basis points below your current rate, Zhao said.

But that’s not a “hard and fast rule,” Channel said.

Some experts set a higher bar: It “makes sense” to consider a refinance if rates have fallen one to two points since you took out the mortgage, Ostrowski said.

Even if your existing mortgage has a high rate, you might want to consider waiting until the central bank is further along in its cuts. The expectation is that rates are to steadily decline throughout the rest of 2024 and into 2025, according to Zhao.

2. You can afford refinance costs

There are two ways to pay for a refinance: with cash up front, or by rolling the expense into your new loan, boosting your monthly mortgage payment.

There’s no such thing as a free lunch when it comes to refinancing a loan, Melissa Cohn, regional vice president of William Raveis Mortgage in New York, told CNBC in August.

Generally, a refinance is going to cost between 2% and 6% of the loan amount that you are refinancing, said Channel.

For example: If your current loan amount is $250,000 and you’re refinancing the total amount, expect to pay anywhere between 2% and 6% of $250,000, or roughly $5,000 to $15,000.

If you plan to refinance, make sure you can afford the associated costs, such as closing costs, an appraisal and title insurance. The total cost will depend on your area.

3. Your savings will outweigh the costs

You can also look into your “break-even point,” or the moment your savings eclipse the cost of the refinance, said Channel.

Here’s an example on doing that math: If you decide to refinance your mortgage and it costs $6,000 and you’re saving $200 a month, divide $6,000 by $200. The result is the number of months that you have before your refinance has “paid for itself.”