Welcome to NerdWallet’s Smart Money podcast, where we answer your real-world money questions. In this episode:
Learn how scammers deceive victims by using AI for voice cloning and learn how you can protect yourself from other AI-related fraud.
How can you protect yourself from AI-driven scams that target your finances?
What new scams are happening as technology advances?
Hosts Sean Pyles and Sara Rathner discuss the alarming use of AI in scams and the future of fraud to help you understand how to safeguard your personal security. They begin with a discussion of AI-driven voice scams, with tips and tricks on recognizing potential fraud, staying informed about scam tactics, and the importance of open discussion to empower against scammer tactics.
Then, scam expert Bob Sullivan, author of “Stop Getting Ripped Off” and host of the podcast The Perfect Scam, joins Sean to discuss the broader implications of AI technology in scams. They discuss the potential for AI to personalize phishing attacks, the ease of creating convincing fake audio, and the importance of skepticism in the face of unexpected calls. Plus: the need for technology companies to embed safeguards, the role of societal learning in approaching unexpected calls, and the importance of verifying any financial requests you receive.
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Episode transcript
This transcript was generated from podcast audio by an AI tool.
Sean Pyles:
We already know that our robot overlords are coming, but in the meantime, while they plot, their artificial intelligence skills are being put to use by bad actors all over the world, utilizing technology to bilk people out of their money. That includes using AI to copy someone’s voice and demand ransom for a non-existent kidnapping.
Jennifer DeStefano:
I had a full conversation with my daughter. It was interactive. There was no pause. There was no break. There was nothing that would lead me to believe that it wasn’t her. So when the mom that stepped outside called 911, she came back in and she said, “Hey, 911 tipped me off that there’s a scam where they use AI and they can replicate anyone’s voice.” I didn’t believe it. It gave me hope, but I didn’t believe it.
Sean Pyles:
Welcome to NerdWallet’s Smart Money Podcast. I’m Sean Pyles.
Sara Rathner:
And I’m Sara Rathner. And Sean, that clip is as creepy as it gets.
Sean Pyles:
It is, and the story we’re going to hear today is as creepy and as awful as it gets as we wrap up our Nerdy deep dive into scams and identity theft and how to protect yourself from all of it so you don’t lose your life savings. Today we’re going to examine the future of the scam industry and the expanding role of AI.
Sara Rathner:
Yeah, I have to say, and I know you’ve touched on this in several of your interviews already, this is exhausting. I mean, it’s hard to listen to this and not think, yeah, no matter what, I’m screwed. They’re going to get me unless I spend all this time and effort protecting myself. And who has the time for that?
Sean Pyles:
I hear you, Sara, and it’s easy to feel somewhat defeated by all these organized criminals whose sole job is to steal our identities, which technology seems to make easier and easier for them, and to scam us in ways that we can’t even conceive of until it happens.
Sara Rathner:
I mean, I’d rather spend more time taking naps, honestly. I don’t do that enough and I’m really sleep-deprived, which is probably making me more susceptible to scams, honestly.
Sean Pyles:
Yeah, I am totally there with you. But Sara, I think we’ve also provided listeners, you included, with some really practical ways to fully arm ourselves that don’t take an undue amount of effort. And as we’ve been saying, one of the most important takeaways from this series, I think, is for everyone to realize that there is no immunity here. This stuff can happen to anyone regardless of how old you are, how much schooling you’ve had, or how much money you make, where you live. It’s a universal risk, and the more we talk about it, the more power we take away from the bad actors.
Sara Rathner:
All right. Well, the idea that AI is getting in on the action is slightly terrifying. You mentioned our robot overlords at the top of the show, and I guess they’re coming for everybody’s bank account PINs.
Sean Pyles:
If only it were that simple, Sara. AI is being deployed in sophisticated ways to manipulate our emotions, find vulnerabilities in software that we rely on every day, and generally make our lives like something out of that show Black Mirror. So in this episode, we’re going to explore things like how is AI being used in scams, what’s the deal with these AI voice scams and what hellish development might we see next in the world of scams. To start, we hear from a woman named Jennifer DeStefano. She lives in Arizona and had an experience that no one should ever go through, but that provides a window into one of the ways that scammers can reach into your heart and try to pull money from your bank account.
Sara Rathner:
All right. We want to hear what you think too, listeners. So tell us your stories of identity theft or getting scammed or share how you’re working to fight it or recover from it. Leave us a voicemail or text the Nerd Hotline at 901-730-6373. That’s 901-730-NERD. Or email a voice memo to [email protected]. Here’s Sean with our first guest.
Sean Pyles:
Jennifer DeStefano. Welcome to Smart Money.
Jennifer DeStefano:
Thank you so much for having me.
Sean Pyles:
So Jennifer, you experienced an AI voice scam. Can you set the scene for us? What was that day like before you got this phone call?
Jennifer DeStefano:
It was just a normal day. I had two children that were up training for a ski race and I had my daughter, she was at dance, so I was going to go pick her up and then hopefully joining my other two kids later in the weekend. So I went to pull up to the studio and get out of my car to go get her, and I got a phone call and it came in from an unknown number. Originally I was going to ignore it, but knowing that I had two of them that were practicing for a ski race and unknown can be medical, you just never know, just in case I decided to answer it.
When I answered it, I said hello, and I was getting out of my vehicle, so I had all my stuff in my hands. I was walking through the parking lot, so I had the phone on speaker and it was my older daughter crying and sobbing saying, “Mom, Mom, I messed up.” And I said, didn’t think anything of it. She ski raced for a number of years. It was a very familiar phone call. And I said, “Okay. What happened?” And she goes, “Mom, I messed up.” And I said, “Okay. What’d you do?” And then all of a sudden a man came on and he said, “Put your head down, lay back.”
And at that point I thought she got really hurt just being toboggan. So then I started to get really concerned. I’m like, “Wait, wait, wait. What’s going on? What’s happening, Bri? What’s going on?” And then this man gets on the phone as she starts saying, “Mom, help me. These bad men have me. Help me, help me, help me.” The phone, her voice starts to fade off with her crying and sobbing and pleading for me. And this man gets on the phone. He goes, “Listen here, I have your daughter.”
“You call the police, you call anybody, I’m going to pop her stomach so full of drugs and have my way with her and then drop her for dead in Mexico.”And at that point was when I had my hand on the door handle of dance, and I walked inside the room and I just started screaming for help. So fortunately there happened to be three other moms there that know me well. I was asking my younger daughter to get her dad on the phone, call her brother, call anybody. So she actually jumped up and ran over to my younger daughter to say, “Let’s go find your dad. Let’s figure this out.”
Another mom said, “I’m going to go call 911.” She stepped outside to go call the police, and the third mom sat beside me so she could hear everything the man was saying as I was trying to figure out where my daughter was, what’s going on.
Sean Pyles:
And so it’s a perfectly normal day. You’re about to get your kids after a day of them doing their activities, you get a phone call and within 30 seconds your world is turned upside down.
Jennifer DeStefano:
Completely upside down. I had no idea what was going on. I had a full conversation with my daughter. It was interactive. There was no pause. There was no break. There was nothing that would lead me to believe that wasn’t her. So when the mom that stepped outside called 911, she came back in and she said, “Hey, 911 tipped me off that there’s a scam where they use AI and they can replicate anyone’s voice.” She’s like, “It could have been a voice recording.” I’m like, “It was definitely not a voice recording. It was interactive. I was asking her questions. She was responding to me. It was not a recording.” And she’s like, “Well, they can do anything.” I’m like, “But it was her crying. It was her sobbing. I know it’s my daughter. It wasn’t a recording.”
Sean Pyles:
And what thoughts are going through your head as you’re having this conversation with what sounds exactly like your daughter?
Jennifer DeStefano:
I didn’t for a second not believe it. It wasn’t until another mom actually got my daughter on the phone and I talked to her and she reassured me that she was who she really was, and I could finally wrap my head around it. And then I finally believed her and then I knew it was a scam.
Sean Pyles:
How much time elapsed from the time that you answered the phone to when your actual daughter was speaking to you and you were reassured the phone call that you got wasn’t legitimate?
Jennifer DeStefano:
So the whole phone call actually took four minutes, but that’s where time freezes in that panic and fear.
Sean Pyles:
Right. Oh God, that’s heartbreaking. So do you know how the scammers got your daughter’s voice and maybe why they targeted you specifically?
Jennifer DeStefano:
So I had a bunch of different thoughts on that. Okay. She’s done a few interviews related to school, sports, whatnot, but that still doesn’t explain the crying and sobbing. It doesn’t explain that conversation. Her voice recording for her phone is her prepubescent voice, so it’s not her current voice. So I honestly have no idea. That’s where a lot of this, what’s scary is at first it was are they following me? Is it targeted? Do they know something? But then hearing how it had happened to a number of other people in different capacities, and you realize it’s a lot more arm’s length.
They were demanding money to be hand delivered to them. So they were making arrangements to come pick me up in a white van with a bag over my head. I had to have all the cash. They were going to take me to my daughter, and if I didn’t have all the cash, then we were both dead.
Sean Pyles:
God, how much were they asking for?
Jennifer DeStefano:
It was originally a million dollars. And then he came up with a number of $50,000 when I pushed back that that wasn’t possible.
Sean Pyles:
And to this day, it’s unclear why you specifically got this call?
Jennifer DeStefano:
I have no idea.
Sean Pyles:
Okay. And so after the phone call ended, I assume you hung up on the scammer when you realized that your daughter was safe.
Jennifer DeStefano:
So once I realized my daughter was safe, I actually had them on mute and they were furious that I wasn’t making final arrangements for a pickup. And then I picked the phone back up and I called them out and said, you don’t have my daughter, this is a scam and I’m going to make sure that this is going to come to a stop and I’m going to do anything I can to stop you. And I hung up on him.
Sean Pyles:
God, what are you on an individual or maybe even a family level doing to safeguard yourselves? Have you guys established a safe phrase that you might use to confirm your identities?
Jennifer DeStefano:
So we did create a safe word, and then it’s a lot of communication. Where are you? Who are you with? Where are you going? So that way if I do get a phone call or anybody gets a phone call, you can easily put it through the test. Does this make sense? Is this where they’re supposed to be? Is this even possible? Do you know the code word? Do you have some identifiers? If I didn’t know where my daughter was supposed to be, I wouldn’t have been able to locate her as fast as I did. And I had her brother, I had all of her siblings coming together in response to help me as well. So everybody was in full communication. You have to communicate and you have to seek help.
Sean Pyles:
Well, Jennifer, is there anything that you would like to leave listeners with?
Jennifer DeStefano:
Just awareness, have these conversations, sometimes maybe tough conversations, especially with children. But you have to have the conversations, have safe words, know where your kids are at. You have to have these conversations and make sure you safeguard your family.
Sean Pyles:
Well, Jennifer DeStefano, thank you for sharing your story with us.
Jennifer DeStefano:
Thank you so much for having me. I really appreciate it.
Sean Pyles:
Sara. I found this story just heartbreaking. I mean, at least they found out it was a scam before handing over money or before Jennifer offered herself up to scammers. But not everyone is so fortunate. Imagine how hard it is to say no to something like this when a loved one seems to be in jeopardy.
Sara Rathner:
Yeah, there was a piece recently in The Cut written by a journalist who knew she would never, ever fall for something like this. Don’t we all think that? And ended up handing over $50,000 in a shoebox to a stranger in a large SUV. I don’t think anybody ever sees themselves doing that. I’m glad Jennifer DeStefano didn’t let it get that far with the help of friends.
Sean Pyles:
And there’s hope that help will come from more than friends. Earlier this year the Federal Trade Commission proposed new rules that would prohibit the impersonation of individuals. It recently enacted rules that prohibit impersonating government or businesses. This proposed rule would extend to, well, us. The proposal is currently in a comment period, so if you feel so moved, go to the FTC’s website, ftc.gov, and comment.
Well, next we’re going to talk with another journalist, Bob Sullivan, who’s been covering the scam world for years now. He hosts a podcast for the AARP called The Perfect Scam and is the author of Stop Getting Ripped Off, among other books. We’re going to talk about the future of the scam world and how to protect yourself as technology continues to make it easier for the bad guys. That’s coming up in a moment. Stay with us.
Bob Sullivan, I’m so glad you could join us on Smart Money.
Bob Sullivan:
Thanks so much for having me.
Sean Pyles:
So Bob, the first question I have for you is how do I know that you are the real Bob Sullivan and not an AI-generated Bob Sullivan?
Bob Sullivan:
This is an excellent question and I’m glad that you’ve started there. You can’t, really. In fact, I did an episode on my own podcast recently where I had someone clone my voice and rather persuasively introduce the podcast, although family members pointed out to me that there were just little things that didn’t quite sound right. So either I was AI or maybe I had a bad cold or something. But it’s hard to tell, a little nasally.
Sean Pyles:
So in this series we’ve talked about identity theft, identity fraud, and the scam world, and I’m hoping that today you can give us a warning about the future of all of this and the role that artificial intelligence or AI is going to play and in fact is playing. So to start, when did we first start seeing AI being put to use in this way? Do you remember a specific AI-generated fraud or scam where you said, oh wow, this is something new?
Bob Sullivan:
Well, I have to be honest with you and say that I sit here reading emails about scams and fraud all day long, and I have not seen evidence of these kinds of things that a lot of folks are talking about right now, which is voice cloning or deep fake videos being used to fool people. Here’s a couple of things that I am worried about, however. All the data collection that we have, the criminals now have access to it and it’s going to be very easy for criminals to use that data to just really carefully craft their phishing pitches so that they’ll know exactly when you are transactional, for example.
Then they’ll know precisely when you order something from Amazon or what your zip code says about your income, and they’ll know how to attack the right person at the right time with the right message. And that’s the kind of artificial intelligence that I’m worried about, criminals using big data to essentially perfectly hone their crimes. But there’s one other thing that I’d really like to mention that enough experts have told me about that I am quite concerned about it, and that’s this idea of generative AI, where a tool like ChatGPT can engage in conversations and learn.
We have told people forever that one of the ways that they might recognize that they’re talking to a criminal over email or in chat or in a game is bad grammar or sentences that don’t quite make sense, non sequiturs. Well ChatGPT is getting very good at holding intelligent sounding conversations. Let’s start by saying it’s going to probably eliminate the bad grammar problem, but even more than that, imagine a tool that learns along the way just the right things to say to romance someone using a formula that’s been tested in the real world or the right things to say to get someone to follow the instructions for an investment scam.
I think these tools are going to learn how to carry on these conversations in ways that we’ve never seen at large scale, and that’s the kind of artificial intelligence that I’m worried about being used in scams.
Sean Pyles:
Okay. And can you talk us through how these AI voice cloning scams do work, whether they’re pervasive or not?
Bob Sullivan:
Sure. Well, I mean there are services, the fellow who did it on me signed up for a website that lets you do this for $5 a month and the first month is 80% off. So for literally one US dollar, you can upload samples of my voice or anyone’s voice and then generate for a potential scam victim, something that sounds incredibly realistic. I think the one thing that’s important to understand about what’s different about voice cloning, I don’t know if you remember the movie Sneakers, it’s one of my favorite hacker movies.
But in that movie, they basically needed a voice passport in order to enter a highly secure building, and they needed the authority figure to say things so that they could piece together cut and paste style a certain sentence, for example. So one way you might be imagining this works is someone tricks me into saying, my mother is in distress and I need you to send money to this wire account, but that’s not it. Instead, what’s powerful about AI voice cloning is with just a few sentences from me, they can extrapolate my intonation, my pausing and make me say anything.
So you don’t need a whole lot of vocabulary in order to make a really, really effective, almost fully independent voice clone.
Sean Pyles:
Well, I’d like to walk our listeners through some of the ways that fraudsters and scammers are putting this technology to work right now in ways that are shocking even to you. Can you share one or two examples that you know of that will give us a sense of just how bonkers this new era is?
Bob Sullivan:
Well, let me go back to the big data example. Foreign governments and large hacker organizations do have what would look to most people like a credit reporting agency on all of us. They have thousands of bits of data about all of us that they can use against us, and it’s data that they’ve been compiling for years. So they know what your tendencies are, they know where you shop, they know where you are. We never talk nearly enough about the theft of location data. All our cell phones are tracking devices.
And so a criminal could know when you’re walking past a store and send you a precisely timed invitation to either buy something at a discount or even worse to send you a note saying, I was just in Ireland. Bob, there’s a bank in Ireland that suddenly tried to charge a $2,000 charge to your account, say yes or no. And I would believe that message right now because I was just there. Those kinds of highly sophisticated, highly targeted crimes enabled by massive amounts of data that again can be searched now instantaneously, that’s the kind of thing that really scares me.
Sean Pyles:
And those examples are highly specific and individualized, which makes them all the more believable. So it makes it hard to trust anything that’s inbound to us.
Bob Sullivan:
Absolutely. And this is a tragedy because technology enables so many wonderful things. It is a terrible thing that we have all of these dark stories as this gray cloud around tech that’s going to prevent a lot of people from even trying to use it, and it’s going to make all of us feel just a little bit insecure because we know these sorts of bad and dangerous things can happen to us. The best example of this is in the health arena. We’re so far behind in what electronic health records could be in America right now.
When you go to the hospital, you’re laying on a gurney and there’s someone asking you over and over again, are you allergic to penicillin and you just were in a car accident. And that’s ridiculous. But because we are, I mean there’s many reasons, but a big one is we are so concerned about criminals misusing this data or companies misusing this data that we are decades behind where we could be with things like electronic health records.
Sean Pyles:
Earlier this episode, I spoke with a woman who received an AI voice scam call from what sounded like her daughter, and it of course wasn’t her daughter. But after everything settled down, she still doesn’t really understand how these people got her daughter’s voice. Her daughter isn’t really on social media, and this woman is also very unclear as to why she was targeted. So do you know how scammers are capturing people’s voices and why they might choose to target one person over another?
Bob Sullivan:
So I don’t know. I think for the vast majority of young people, it would be fairly trivial to examine a couple of TikTok videos and get enough voice sample in order to fake their voices. There are people who are not on social media and whose recorded voices aren’t in any, say, school websites or anything like that. I think they are few and far between. So I think most people should assume that a criminal could absolutely get enough audio samples of your voice to do this to you. So I can’t speak to that specific instance or why that person was targeted or why that child was targeted.
The only thing that concerns me is I don’t think we should give anyone the impression that this is happening on a widespread basis. It’s not. 99% of these kinds of calls are still being done by just human beings in boiler rooms. Nevertheless, this absolutely can be done. It can be done really inexpensively. And as I just mentioned, all of us are vulnerable to this. You’d be shocked at how much, even if you don’t have any social media, that pieces of your life have been posted by other people.
So it’s out there, and again, it takes very little, we’re talking probably less than a minute of audio in order to generate a fake you.
Sean Pyles:
What do you think we’re supposed to try to do to combat this? I mean, using me as an example, I host this podcast, you host one too. Our voices are out there just waiting for scammers to take a clip and make us say whatever they want, call our loved ones and use that voice to try to get their money. How do we fight that?
Bob Sullivan:
Yeah, you and I are screwed.
Sean Pyles:
Bob Sullivan:
Sorry. But the best, I talked to some other expert about this, so I can’t claim this advice myself, but I think it’s very good advice. At the beginning of the Photoshop era, people saw pictures of pyramids moved and weren’t skeptical of that. We just thought photographs couldn’t lie. I think nowadays for the most part, and certainly not everybody, for the most part, if you saw a crazy picture of Joe Biden riding on a camel or something, that there would be a piece of you at least that would say wait a minute, this might be fake.
There’s now an impulse that things you see might very well be faked. I’m hoping that our level of 21st century digital sophistication gets there quick enough with audio that your parents and my parents will have a predisposition to think if this is a weird phone call from Bob or Sean, it could be fake. And I think that’s the sort of learning curve we all have to go through kind of as a society.
Sean Pyles:
Well, let’s turn to some tactical ways that people can try to protect themselves. Can you tell us about the importance of things like pass keys, biometrics, other ways to authenticate that you are who you are when you get a call from someone or you allegedly call someone else?
Bob Sullivan:
I’m glad you brought that up. When it comes to voice printing in particular, there are these new technologies that are a little bit like image watermarking they’re discussing putting on voices. So you can imagine there being something even inaudible embedded in an audio phone call, which the technology company, the phone company, used seamlessly to verify that you were you, sort of like a Verisign email or whatnot. So there’s people who are working on technologies that would help with this verification. I’m not a fan of putting these really hard things onto individual consumers.
I think it’d be much better if the technology companies were forced to solve these problems because I can’t give my mom advice on how to verify how I might contact her at every platform that ever is going to exist. That advice is going to get outdated almost immediately.
Sean Pyles:
Given that we do live in this world that we are living in, I’m trying to think about ways that I can protect myself and my family. After I began doing research into 21st century scams, I established a safe phrase that if my family gets a call that alleges it’s from me and I’m in a panic, they’ll say, “Hey, what’s the safe phrase?” And I will tell them that phrase, if it’s actually me. And if it’s not, then the scammer’s going to try to divert them some other way, I’m sure.
Bob Sullivan:
I do think that’s great, and I don’t mean to trivialize any of that, but I would like to point out most people in security would say you’ve also created a vulnerability because someone armed with that phrase could easily disarm someone in your family, right?
Sean Pyles:
That’s true. Although the phrase has only been uttered in person when we agreed on what the phrase is. So we’ve tried to keep it as away from recording devices as possible to the extent that we can.
Bob Sullivan:
The only real point in my saying that was none of these things are foolproof. So it’s good to have that in mind. I think the one thing that helps all the time in the end, whatever we’re talking about here, almost inevitably, is a cover story for give me money. All of these, whatever technology we’re using, whatever the story is, in the end, there’s an ask of some kind. And stealing people against the ask is really, really important. And the best way to do that is interruption. The best way to do that is to train everybody in every circumstance, whatever is happening, to stop and talk to an independent third party, whether that be a family member or a financial professional or something.
Your son’s in jail in Europe, he needs bail money immediately, take the 15 seconds to talk to someone not involved in the situation and hear the words come out of your mouth. When you get a phone call you don’t expect, hang up and then go to the company’s website yourself and call the official published number, call the company back. That solves about 99% of these problems.
Sean Pyles:
Well, Bob, I’m asking this of all of the experts that we’re talking with for this series. So I’m going to ask you too, have you ever experienced a scam or identity theft or fraud?
Bob Sullivan:
No, but I’ve certainly been through a bunch of credit card-style identity thefts, but fortunately, knock on wood, nothing that we would consider deeply involved identity theft.
Sean Pyles:
Well, Bob, do you have any hopeful thoughts as we wrap up this series, which has been a bit of a bummer as we’ve talked about fraud and scams and people losing their life savings to technology assisted terrible people?
Bob Sullivan:
Yeah. So I spend all my week talking to people who’ve had their life savings stolen from them in all manner of speaking. It’s hard to stay optimistic. I think there’s a whole bunch of factors coming into play here. We have an aging population, many of whom thankfully have a lot of savings, they’re an easy target. And as I’ve mentioned, we have all of these tools that make it so much easier for someone halfway around the world to steal money instantly in untraceable ways. This has never happened in human history before, so this is the golden age of crime.
However, we are all talking about it now. So that’s really positive. Here’s the most optimistic thing I can tell you. Young people, software designers, engineers inside companies are now getting out of school having taken ethics classes and social impact classes and are starting to push back on their managers when they come up with tools like this. And that’s where the tide will turn is when enough people who have a grandparent who’s been a victim of a scam work at a software company and they say, we have to put this protection into this device before we release it to the world. And I do think those conversations are happening. So I am actually optimistic about that.
Sean Pyles:
That’s good to hear. And is there anything else that you wanted to mention that we didn’t touch on?
Bob Sullivan:
What we find is that a really, really big obstacle to fixing this problem is shame and embarrassment. Many, many people won’t come forward after they’ve been a victim of a crime like this because they feel stupid. I called myself stupid. All the language around scam crimes tends to focus on the individual instead of the system. Well, if you read a news story about a person who fell for a home improvement scam, that just doesn’t sound the same thing as someone who was robbed at gunpoint.
Sean Pyles:
Was the victim of a crime. That’s what happened at the end of the day.
Bob Sullivan:
They’re a victim of a crime, and we work hard on the language that we use to stress that there was a crime. There’s something about if we say, well, that person fell for this scam. Well, I would never fall for that scam. You can sort of put it at arm’s length, and that makes it a little easier to not do anything about the problem. And it takes the focus off the criminal. We kind of think the criminals are clever and sexy. But more than anything, we want to try to get away from the idea of shame because when someone is embarrassed because they are a victim of a crime, they don’t come forward.
The statistics don’t reveal the true nature and breadth of the crime. Everybody will tell you this, all this crime is wildly under reported. So however big the numbers seem to be, they’re at least double what we hear from the Federal Trade Commission and whatnot. And so anything that I can do to relieve the stigma from being a victim of crime like this, I’m all for it.
Sean Pyles:
Bob Sullivan, thank you so much for helping us out today.
Bob Sullivan:
Thanks a lot for having me.
Sean Pyles:
So Sara, after four episodes of hearing from experts and people who have experienced scams, I’m in a state of what I would call bleak optimism. The world right now is rife with scammers and their methods of duping innocent people are evolving at a rapid pace. But simultaneously, I can’t remember a time where scams and fraud were more present in the cultural conversation. Yes, it is fully a tragedy that our means of communication are so compromised that we cannot trust a call from a loved one in what seems like their most dire moment.
That really can’t be overstated. But hopefully the increased awareness of these scams will help people avoid sending money to bad actors and mitigate feelings of shame that people carry after enduring a scam. And hey, maybe one day our government will make some laws that help tamp down on the rampant scams that we’re all facing.
Sara Rathner:
And there’s this saying in journalism, if your mother tells you she loves you, fact check it. Well now you have to. So that’s the world we live in.
Sean Pyles:
If anyone contacts you at all, fact check it.
Sara Rathner:
Yeah. And text them on the side and be like, “Hey, are you calling me from jail right now?” And they’ll be like, “No.”
Sean Pyles:
I think the bottom line for everyone listening is to exercise extreme caution when you speak with anyone online and before you send money to anyone ever.
Sara Rathner:
If somebody is asking you for money and you don’t really know who they are, they are not who they tell you they are. How’s that? How’s that for general rule?
Sean Pyles:
All right. Well, for now, that’s all we have for this episode and this Nerdy deep dive about scams and ID theft and fraud. If you have a money question about any of this or anything else, turn to the Nerds and call or text us your questions at 901-730-6373. That’s 901-730-NERD. You can also email us at [email protected]. Visit nerdwallet.com/podcast for more info on this episode and remember to follow, rate and review us wherever you’re getting this podcast.
Sara Rathner:
This episode was produced by Tess Vigeland. Sean helped with editing. Kevin Berry helped with fact checking, Sara Brink mixed our audio.
Sean Pyles:
And here’s our brief disclaimer, we are not financial or investment advisors. This nerdy info is provided for general educational and entertainment purposes and may not apply to your specific circumstances.
Sara Rathner:
And with that said, until next time, turn to the Nerds.
Lloyds profits fall as competition for mortgages heats up
Pre-tax profits drop to £1.6bn between January and March, down from £2.3bn last year
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Lloyds Banking Group has suffered a 28% drop in first-quarter profits amid tough competition for mortgages and savings, but bosses said they expected those pressures to soon ease, helped by an improving UK economy.
The country’s largest mortgage lender, which also owns the Halifax brand, said pre-tax profits dropped to £1.6bn between January and March, having fallen from £2.3bn last year when rising interest rates boosted the lender’s profits by almost 50%.
The bank’s chief financial officer, William Chalmers, said this reflected “keen pricing in the mortgage markets, and savings moving into higher rate accounts”. Competition and jitters in the mortgage market led to a drop in its total outstanding loan book.
It resulted in a 10% drop in net interest income, which accounts for the difference in loan charges versus what is paid out to savers, to £3.2bn in the three months to March.
Pressure from politicians and regulators to pass on interest rates to savers at the same rate they had been raising mortgage and loan charges has squeezed income for major mortgage providers such as Lloyds in recent months.
In response, banks have had to compete harder for customer deposits by offering more substantial returns, particularly on fixed savings products where consumers lock away cash for longer. It attracted £1.3bn in regular customer deposits but that failed to make up for the £3.5bn pulled by business clients.
However, Chalmers said these savings and mortgage pressures were likely to “ease through 2024”, as economic conditions continued to improve.
House prices, which Lloyds previously expected to fall by 2.2% in 2024, are forecast to rise by 1.5% by the end of the year.
The banking group, often seen as a bellwether for the UK economy, is also forecasting a steady improvement in economic growth, at a rate of 0.3% in most quarters and a drop in inflation to 2.4% – from 3.2% in March – resulting in a fall in interest rates to 4.5% by December. It expects the Bank of England to cut rates three times in 2024, starting in the middle of the year.
Chalmers said mortgage applications had already soared by 20% in the first quarter, which could translate into new home loans, and reverse some of its loan book losses. That partly reflected the group’s willingness to offer better interest rates in order to boost lending.
“We’re really pleased to see the pickup in applications, and development of our market share, in that respect. And I think that represents what is a series of competitive offers out there in the market, suiting our customer needs. We’d hope to maintain that ambition over the course of the year,” Chalmers said.
Overall, the banking boss said he expected the UK mortgage market to pick up by 5% by the end of 2024. “We’d hope to play a major part in it,” Chalmers added.
The improved economic outlook meant the bank was more confident that customers could repay their loans. Despite the cost of living crisis and higher mortgage repayments, which have weighed on borrowers, Lloyds set aside £57m for potential defaults, compared with £243m last year.
The Lloyds chief executive, Charlie Nunn, said: “The group is continuing to deliver in line with expectations in the first quarter of 2024, with solid net income, cost discipline and strong asset quality. Our performance provides us with further confidence around our strategic ambitions and 2024 and 2026 guidance.”
Investors had also been hoping for updates on the Financial Conduct Authority investigation into whether consumers have been charged inflated prices for car loans. Lloyds, which has the largest car loan division of the four biggest UK banks, has already put aside £450m – far short of the £2bn that analysts believe it could be on the hook for.
However, Lloyds did not give any more details about whether it might put aside more cash to cover potential fines or compensation for customers. The FCA has indicated that it will give more details on its findings by the autumn.
Were the good old days really all that good? Sure, when mortgage rates were below 3%, it was a lot cheaper to purchase a house, but we were also in the middle of a global pandemic.
At the start of 2021, the average rate for a 30-year fixed mortgage was 2.65%, according to data from Freddie Mac. During the homebuying boom of 2020 and 2021, the number of borrowers taking out new mortgages reached a more than two-decade high.
Over the past two years, a combination of high mortgage rates, low housing inventory and sluggish wage growth has crippled affordability for homebuyers.
While many are holding out for mortgage rates to fall, it’s unlikely we’ll see 2% mortgage rates any time soon. In fact, experts hope we don’t.
A return to that kind of low-rate environment would indicate major problems in the economy, said Alex Thomas, senior research analyst at John Burns Research and Consulting.
Mortgage rates typically fall during a recession. But a recession also comes with widespread unemployment, increased debt, investment losses and overall financial instability.
In today’s housing market, homebuyers should have realistic expectations. Experts predict mortgage rates to inch closer to 6% by the end of the year as inflation cools and the Federal Reserve starts to cut interest rates. Record-low mortgage rates aren’t in the cards again, and that’s likely for the best.
Mortgage rates change every day. Experts recommend shopping around to make sure you’re getting the lowest rate. By entering your information below, you can get a custom quote from one of CNET’s partner lenders.
About these rates: Like CNET, Bankrate is owned by Red Ventures. This tool features partner rates from lenders that you can use when comparing multiple mortgage rates.
How did mortgage rates drop below 3% in the first place?
Economic uncertainty and market volatility — whether during an election cycle or a pandemic — impact the direction of mortgage rates. It’s often said that bad news for the economy is good news for mortgage rates, and vice versa.
A significant lever for mortgage rates is the federal funds rate, which the Fed keeps low when it needs to stimulate economic growth. For example, during the 2008 financial crisis, the Fed slashed that benchmark rate to zero to bolster the economy. When there were signs of recovery in 2015, the central bank started raising interest rates again, sending mortgage rates into the 4% to 5% range until 2020.
The COVID-19 pandemic sparked another economic crisis. To incentivize people to borrow and spend money — and avoid a prolonged recession — the Fed once again cut the federal funds rate to near zero and pumped money into the economy by purchasing government bonds and mortgage-backed securities. Mortgage interest rates fell quickly, bottoming out in the mid-2% range in 2021.
But the combination of supply shocks, record-low rates and an extreme increase in money supply from government stimulus helped send prices way up, according to Erin Sykes, chief economist at NestSeekers International.
In early 2022, the Fed had a new problem on its hands: inflation.
💰 Federal Reserve monetary policy
In a recession, the Federal Reserve tries to spur economic growth through quantitative easing, a monetary policy that consists of cutting the federal funds rate to encourage lending and borrowing to consumers, and increasing its purchase of government-backed bonds and mortgage-backed securities.
If the Fed needs to slow the economy down and reduce the money supply in financial markets, it does opposite: quantitative tightening. By increasing the federal funds rate and tapering its bond-buying programs, the central bank raises the cost of borrowing money, which puts upward pressure on longer-term interest rates, like 30-year fixed mortgage rates.
What caused mortgage rates to surge again?
With prices surging in 2022, the Fed’s main tool was to adjust interest rates, making credit more expensive and disincentivizing borrowing. As a result of a string of aggressive rate hikes, the federal funds rate went from near zero to a range of 5.25% to 5.5%, where it’s remained since last summer. Average mortgage rates skyrocketed, peaking past 8% last October.
Although inflation has gone down, the Fed isn’t ready to start lowering rates just yet. The central bank would like to see evidence of a weaker economy (including consistently lower inflation and higher unemployment) before making any adjustments to its monetary policy.
📈 How the Fed impacts mortgage rates
Though the Federal Reserve doesn’t directly set mortgage rates, it controls the federal funds rate, a short-term interest rate that determines what banks charge each other to borrow money. When the federal funds rate moves up, it impacts longer-term interest rates, like 30-year fixed mortgage rates, as banks raise interest rates on home loans to keep their profit margins intact.
Why won’t mortgage rates move toward 2% again?
Economists and housing market experts agree that mortgage rates will fall over the next several years, but not below 3%.
When mortgage rates hit their record lows just a few years ago, the federal funds rate was near zero. As the Fed starts cutting rates later this year, the plan is to do so slowly and incrementally. Barring another major economic shock, the Fed projects the federal funds rate will take only modest adjustments down.
In the most recent policy meeting, Fed Chair Jerome Powell remarked that the federal funds rate “will not go back down to the very low levels that we saw” during the financial crisis, suggesting that the economy can adapt to a more “neutral” benchmark rate range of between 2.4% to 3.8% in the long run, i.e., less tightening, but not too much easing from the current range of 5.25% to 5.5%.
The Fed would be forced to lower rates close to zero only if there were a dramatic economic shock, such as a pandemic or recession, said Selma Hepp, chief economist at CoreLogic. In that case, if the central bank started purchasing government bonds and mortgage-backed securities again, there’s a possibility mortgage rates could return to those record lows.
However, without such an upheaval, there’s a floor under how low mortgage rates will go, and it’s highly unlikely they’ll ever drop to their 2020-2021 levels.
“With the Federal Reserve ending quantitative easing and stepping out of the market for mortgage-backed securities, rates will settle at a much higher level,” said Matthew Walsh, housing economist at Moody’s Analytics.
Moody’s Analytics predicts mortgage rates will stabilize between 6% and 6.5% over the next few years. That’s high compared with the recent past, yet it’s a historically normal range for mortgage rates.
How can homebuyers adapt to higher mortgage rates?
The housing market is frustrating, but prospective homebuyers are starting to come to terms with this new reality. Following the pandemic, people are moving on with their lives, whether that’s building a family, relocating, downsizing or upgrading.
For some households, that means making room in their budget for a monthly mortgage payment at a 6% or 7% rate.
When you monitor mortgage rate movement, you’re usually looking at national averages determined by weekly rate information provided by lenders. While those rates give a picture of the “typical” mortgage rate, that’s not necessarily the rate you’ll get when applying for a mortgage.
It’s possible to get a better deal on your mortgage.
To qualify for a mortgage, most lenders require you to have a minimum credit score of 620, but lenders offer the lowest mortgage rates to consumers with excellent credit scores, around 740 and above.
You might also consider purchasing mortgage points, also known as discount points. This is an extra fee you pay upfront in exchange for a lower interest rate. Each mortgage point typically costs 1% of the purchase price of a home and will lower your mortgage rate by 0.25%.
A shorter-term loan like a 15-year or 10-year mortgage will have a lower interest rate than a 30-year fixed mortgage. Your monthly payments will be higher with a shorter-term loan because you’re paying the loan off in less time, but you’ll save big on interest.
Buying a home is likely the biggest transaction you’ll make in your lifetime. Regardless of the market, carefully assess your needs and what you can afford.
There’s a reason so many people have been struggling to purchase a home this year. Not only are housing prices elevated as a result of low inventory, but mortgages are expensive to sign.
As of this writing, the average mortgage rate on a 30-year loan is 6.82%, according to Freddie Mac. But rates have fluctuated a bit since the start of the year, and they’ll likely continue to do so based on general market conditions.
Meanwhile, most mortgage experts expect rates to cool later in the year. But how low will they go? That’s the big question.
Federal Reserve actions could lower borrowing costs for home buyers
The Federal Reserve raised interest rates 11 times between 2022 and 2023 to help slow the pace of inflation. While the Fed’s actions don’t always completely correlate to movement in mortgage rates, they have the potential to influence them. As such, it’s not a big surprise that mortgages are currently expensive to sign.
There’s some good news, though. Despite the fact that inflation remains stubbornly elevated at over 3%, which is above the 2% level the Fed is targeting, it’s cooled nicely since 2022. As such, the Fed still thinks it can move forward with three interest rate cuts in 2024, the first of which could come within months.
What this means is that mortgage rates could fall quite a bit between now and the end of the year. But it’s tough to get a handle on how low they’ll go.
More: Check out our picks for the best mortgage lenders
Is it conceivable that mortgage rates will drop to about 6%? Yes. Whether they’ll go lower is the big question, and that’s a hard one to answer right now.
In January, the National Association of Realtors projected that mortgage rates would fall to 6.3% by the fourth quarter of the year. But if rates fall to 6.3% at the start of that quarter, they may be closer to the 6% mark by the end of it.
How to lock in the most competitive mortgage rate you can
It’s hard to know exactly how low mortgage rates will go in 2024. So instead of fixating on that, try to focus on steps you can take to set yourself up for a more attractive mortgage rate.
For one thing, try boosting your credit score. You can do so by paying bills on time and shedding some credit card debt. Checking your credit report for errors is also a great idea.
Also, try to work on reducing your debt-to-income ratio. That measures the percentage of your income that’s allocated toward existing debt payments. Paying off some credit card debt could help in this regard, too.
Finally, be prepared to shop around. You never know when one lender might have a better rate to offer you than another.
It’s fair to assume that mortgages will be less expensive to sign by the time 2024 gets close to wrapping up. But how much less expensive is a question that remains tough to answer.
For many aspiring homebuyers, the dream of homeownership has become increasingly difficult to attain in recent years. A combination of soaring home prices and rising mortgage rates has made purchasing a property significantly more expensive, stretching budgets to their limits. For example, the median home price nationwide hit $417,700 in Q4 2023 — up from an average of $327,100 in Q4 2019. And, 30-year fixed mortgage rates currently average 7.30%, more than double what they were just a few years ago.
That said, it can still make sense to buy a home right now, even with today’s unique challenges looming. After all, high rates generally mean buyer competition is down, so it could be a good time to make your move. And, while you may be thinking about waiting for rates to fall, there’s no guarantee that will happen in the near future. Plus, you always have the option to refinance your mortgage loan at a lower rate if mortgage rates do eventually decline.
But getting approved for a mortgage in today’s unique landscape can prove challenging even for borrowers with strong credit and stable employment. Lenders have understandably grown more cautious in the face of economic headwinds, making the application process more rigorous. So what should you do if your mortgage loan application is denied by a lender?
Find out how affordable the right mortgage loan could be today.
Was your mortgage loan application denied? 9 steps to take
If your mortgage application has been denied, it’s important not to lose hope. There are steps you can take to improve your chances of approval:
Request the denial reasons in writing
By law, lenders must provide you with the specific reasons for denial in writing upon request. This documentation is essential, as it will allow you to precisely identify and address the problem areas that led to the rejection. Never assume you know the reasons; get them directly from the lender so you know what to focus on instead.
Explore your top mortgage loan options and apply for preapproval now.
Review your credit report
Mistakes and inaccuracies on credit reports are surprisingly common. If your mortgage loan application is denied, obtain your free annual credit reports from all three major bureaus (Experian, Equifax and TransUnion) and scrutinize them carefully. If you find any errors, dispute them with the credit bureaus to have them corrected or removed, as this could significantly boost your approval chances.
Work to improve your credit
For many buyers, a subpar credit score is the roadblock to mortgage approval. If a low credit score causes your mortgage application to be denied, take proactive steps like paying all bills on time each month, reducing outstanding balances on credit cards and other loans and avoiding opening new credit accounts in the short term. Improving your credit profile can rapidly enhance your mortgage eligibility.
Increase your down payment
Many lenders favor borrowers who can make larger down payments upfront. Not only does this lower the overall mortgage loan amount, but it demonstrates your commitment and ability as a borrower. Options to boost your upfront contribution include tapping employment bonuses, tax refunds, gifts from relatives or simply saving more aggressively.
Find a co-signer
If your own income and credit aren’t adequate for mortgage approval, applying jointly with a creditworthy co-signer could be the solution. A spouse, parent or other party with strong finances can boost the overall application through their positive profile. However, it’s imperative that all parties understand and accept the legal obligations before proceeding.
Explore government-backed loans
While conventional mortgages from banks and lenders typically have stringent requirements, loans insured by government agencies tend to have more flexibility. If you meet the eligibility criteria for an FHA, VA or USDA loan based on income limits, military service or rural location, these could represent a pathway to homeownership.
Find ways to increase your income
If you’re denied due to a high debt-to-income (DTI) ratio, finding ways to boost your monthly earnings could be the deciding factor. Options to do this include requesting a raise from your current employer, finding a higher-paying job or establishing steady side income from a second job or freelance work.
Change lenders
Not all mortgage lenders evaluate applications through the same underwriting models or with the same risk appetite. While one bank may deny you, another lender could give you a green light after reviewing the exact same financial information. So, if you’re denied a mortgage loan with one lender, it makes sense to shop around, ask questions and get multiple assessments to find the right fit.
Wait and apply again
Mortgage approvals are based on a specific snapshot of your finances at one point in time. If rejected, sometimes the best recourse is to press pause, work on improving weak areas over several months and then reapply with an updated financial profile for a fresh evaluation.
The bottom line
A denied mortgage can be disheartening, but don’t give up hope. With diligent preparation, an openness to explore alternative pathways and a willingness to make difficult but necessary changes, you may still have options to secure financing and make your homeownership dreams a reality. Ultimately, perseverance and knowledge are key when faced with today’s uniquely challenging housing market.
Angelica Leicht
Angelica Leicht is senior editor for CBS’ Moneywatch: Managing Your Money, where she writes and edits articles on a range of personal finance topics. Angelica previously held editing roles at The Simple Dollar, Interest, HousingWire and other financial publications.
Mohtashami kicked off the sessions by talking about the differences between the current mortgage rate environment and some of what was seen in the early days of the financial crisis of the 2000s, saying that Americans generally are in a much better position than they were back then.
The Fed has recently indicated that it is not likely to reduce interest rates anytime soon due to economic indicators, and Mohtashami revived a 2022 prediction about what it will take to get the Fed to “break” on rates.
“In 2022, I brought up the premise that the Fed will not pivot until the labor market breaks,” he said. “So, if all of you are looking for a sustained lower move in mortgage rates, that’s what you’re going to see.”
While a lot of the oxygen in the discussion is taken up by inflation, Mohtashami asserts that’s not what the Fed is primarily focused on.
“What the Fed wants to see is the labor market get very soft and to the point that it’s breaking, and then they will find all the confidence in the world to do rate cuts and talk about making sure we have a soft landing,” he said.
Reading the data, he said, might tell a different story about the situation as opposed to strictly paying attention to what Fed officials are saying.
Illuminating data points include wage growth, job openings, the number of people quitting to find higher-paying work, and jobless claims on a weekly or monthly basis. These help observers to monitor changes in the labor market similarly to the Fed, he explained.
From there — and when combined with employment in construction and housing permit data — the thinking around rates will become clearer.
“If the labor market gets softer and the Fed starts getting a little bit more dovish, then not only can the spreads get better, but if the 10-year yield goes down, there’s your 6% [or] sub-6% mortgage rates,” he said. “But this means the labor market has to break. So, we’re all focusing on inflation, but not what really matters.”
Simonsen: More data, less ‘vibes’
A lot of the conversation in the housing market can be focused on “vibes,” or general feelings about the way things are going. Simonsen explained to attendees at The Gathering that focusing instead on real-time data is key to having accurate, predictive indicators about where the market is at and where it will go.
Simonsen began his presentation by talking about an early Altos interaction with both Goldman Sachs and Lehman Brothers. In 2007, right around the time he started Altos Research, he was attending a conference where representatives of both companies were speaking. After they finished speaking, he aimed to pitch both companies on why they might need the kind of data Altos specializes in.
He recalled his pitch.
“I’m Mike Simonsen, my company is Altos Research, and we track every home for sale in the country every week,” he recalled saying. “We check all the pricing, all the supply and demand, and all the changes in that data, and we give that to you because traditional housing data is months behind the curve before you see what’s happening.”
The Lehman representative turned him down flatly, saying, “We’ve got so much more data than you can possibly imagine. We’re making so much money. Don’t even bother,” Simonsen recalled.
The Goldman representative was more open to hearing what he had to say, and 12 weeks later engaged with Altos as a client. A year later, Lehman Brothers went out of business, Simonsen explained.
Simonsen asserted that monitoring changing data points on a daily and weekly basis — including inventory levels, new and pending home sales, and home price data and signals —can help to more efficiently track the impact of mortgage rates.
“I believe that our obligation is to communicate with the data for everybody in the cycle, from the biggest players down to every single homebuyer and seller,” Simonsen said.
He began by looking at fresh inventory data.
“The biggest takeaway from when we’re looking at the inventory numbers is rising rates constitute rising inventory — or put another way, demand slows, inventory grows,” he said. “And that’s actually counterintuitive for a lot of folks who are just casually looking at the data.
“They think, ‘Mortgage rates are higher, nobody’s going to sell, therefore inventory is going to fall when rates fall again. Then we’ll finally get some inventory.’ But the data shows that actually, the opposite is true.”
Multiple years of higher rates will be needed to return inventory to pre-pandemic levels, but inventory growth is rising across the country, particularly in states like Florida and Texas, he explained.
More home sellers are also starting to enter the market. Last year, rising rates depressed seller participation, but higher rates are starting to be seen as more of a norm. A general sense of predictability will allow more sellers to enter the market, he said.
Prices are likely to remain stable due to higher rates, he added.
“More data, less vibes,” Simonsen said.
Fairweather: Less affordability
Daryl Fairweather of Redfin primarily spoke about housing demand; generational participation in the market; the impact of climate events and natural disasters on homebuying activity; and the flexibility that renters might experience, particularly as weather events become more prominent nationwide.
“People are spending more and more of their money on housing, and housing isn’t getting any more affordable,” she said. “We still have this underlying shortage of homes.”
But the presentation was primarily designed to be forward looking, and in that respect, interest rates and inflation are elevated, but the economy is growing. Demographics are also changing, with millennials being the largest generation and Gen Z being smaller but increasingly influential in the economy.
Changing preferences and economic realities are also disrupting long-standing paradigms related to housing in the U.S., she said.
“It used to be that homeownership was the American dream, and now it’s more the American pipe dream,” Fairweather said. “People just feel like it’s a ‘pie in the sky’ thing for them to achieve because housing affordability keeps getting worse and worse.”
Climate is also a very real issue having an impact on the housing market, Fairweather said.
“For a long time I would talk about a changing climate and people would say ‘That’s a problem for the future,’” she said. “But now, we’re seeing insurance costs going up and people are deciding where to live based on the climate. It’s becoming a more and more important issue in the housing market.”
Fairweather shared that Redfin experimented in 2020 to analyze the impacts that climate change can have on homebuying behavior over a three-month period in which users were divided into two pools: one that showed them a view of flood risk and one that did not.
“In the control view, there is no flood risk, and then in the treatment view, you could see flood risk for every single home that’s on Redfin,” she said. “The people that were shown flood risk — if they were previously looking at severely or extremely risky homes for flood risk — they went on to buy homes that had half as much risk when they saw that information,” she said.
This communicates a potential value-add opportunity for mortgage professionals to offer more robust climate information, in addition to where interest rates are projected to go or demographic information.
“[That can help] inform them about how to make the best homebuying decision,” Fairweather said.
Average mortgage rates inched lower yesterday. But all that did was wipe out last Friday’s similarly tiny rise.
Earlier this morning, markets were signaling that mortgage rates today might barely budge. However, these early mini-trends often alter direction or speed as the hours pass.
Current mortgage and refinance rates
Find your lowest rate. Start here
Program
Mortgage Rate
APR*
Change
Conventional 30-year fixed
7.302%
7.353%
+0.01
Conventional 15-year fixed
6.757%
6.836%
+0.01
30-year fixed FHA
7.064%
7.111%
-0.07
5/1 ARM Conventional
6.888%
8.036%
+0.12
Conventional 20-year fixed
7.199%
7.257%
+0.05
Conventional 10-year fixed
6.663%
6.737%
+0.06
30-year fixed VA
7.292%
7.332%
+0.01
Rates are provided by our partner network, and may not reflect the market. Your rate might be different. Click here for a personalized rate quote. See our rate assumptions See our rate assumptions here.
Should you lock your mortgage rate today?
This morning’s Financial Times reports, “While the base case remains a reduction in borrowing costs, the options market shows a 20% probability of an increase.” That means most investors think the Federal Reserve will cut general interest rates this year, but they reckon there’s a 20% chance of the central bank actually hiking them. That’s new and scary.
Although the Fed doesn’t directly determine mortgage rates it has a huge influence on the bond market that does. And I very much doubt mortgage rates will fall consistently before the Fed signals that a cut in general interest rates is imminent. And a Fed rate hike is likely to send mortgage rates much higher: maybe back up to 8% or beyond.
So my personal rate lock recommendations remain:
LOCK if closing in 7 days
LOCK if closing in 15 days
LOCK if closing in 30 days
LOCK if closing in 45 days
LOCKif closing in 60days
However, with so much uncertainty at the moment, your instincts could easily turn out to be as good as mine — or better. So, let your gut and your own tolerance for risk help guide you.
>Related: 7 Tips to get the best refinance rate
Market data affecting today’s mortgage rates
Here’s a snapshot of the state of play this morning at about 9:50 a.m. (ET). The data are mostly compared with roughly the same time the business day before, so much of the movement will often have happened in the previous session. The numbers are:
The yield on 10-year Treasury notes edged down to 4.6% from 4.64%. (Good for mortgage rates.) More than any other market, mortgage rates typically tend to follow these particular Treasury bond yields
Major stock indexes were rising this morning. (Bad for mortgage rates.) When investors buy shares, they’re often selling bonds, which pushes those prices down and increases yields and mortgage rates. The opposite may happen when indexes are lower. But this is an imperfect relationship
Oil prices decreased to $81.59 from $82.06 a barrel. (Good for mortgage rates*.) Energy prices play a prominent role in creating inflation and also point to future economic activity
Goldprices fell to $2,333 from $2,350 an ounce. (Neutral for mortgage rates*.) It is generally better for rates when gold prices rise and worse when they fall. Because gold tends to rise when investors worry about the economy.
CNN Business Fear & Greed index — climbed to 40 from 33 out of 100. (Bad for mortgage rates.) “Greedy” investors push bond prices down (and interest rates up) as they leave the bond market and move into stocks, while “fearful” investors do the opposite. So, lower readings are often better than higher ones
*A movement of less than $20 on gold prices or 40 cents on oil ones is a change of 1% or less. So we only count meaningful differences as good or bad for mortgage rates.
Caveats about markets and rates
Before the pandemic, post-pandemic upheavals, and war in Ukraine, you could look at the above figures and make a pretty good guess about what would happen to mortgage rates that day. But that’s no longer the case. We still make daily calls. And are usually right. But our record for accuracy won’t achieve its former high levels until things settle down.
So, use markets only as a rough guide. Because they have to be exceptionally strong or weak to rely on them. But, with that caveat, mortgage rates today look likely to be unchanged or close to unchanged. However, be aware that “intraday swings” (when rates change speed or direction during the day) are a common feature right now.
Find your lowest rate. Start here
What’s driving mortgage rates today?
Today
This morning’s two April purchasing managers’ indexes (PMIs) will likely be good for mortgage rates. These “flashes” (initial readings and subject to revision) are both from S&P.
Here are this morning’s actual numbers in bold, alongside the prepublication consensus forecasts, according to MarketWatch, together with the March actual figures:
Services PMI — 50.9 actual; 52 expected; 51.7 in March
Manufacturing PMI — 51.1 actual; 52 expected; 51.9 in March
You can see that the PMIs were worse than expected, which is typically good news for mortgage rates.
Tomorrow
Tomorrow’s durable goods orders for March rarely affect mortgage rates. And they’d need to contain some pretty shocking data to do so tomorrow.
Markets are expecting those orders to have risen by 2.6% in March compared to a 1.3% increase in February. They’ll probably need to be significantly higher than 2.% to exert upward pressure on mortgage rates and appreciably lower to push them downward.
The rest of this week
Nothing has changed since yesterday concerning economic reports due on Thursday and Friday. So, I’ll repeat what I wrote yesterday:
We’re due the first reading of gross domestic product (GDP) for the January-March quarter on Thursday. And that could have a larger effect than PMIs and durable goods orders, depending on the gap between expectations and actuals.
But Friday’s personal consumption expenditures (PCE) price index for March is this week’s star report. That’s the Federal Reserve’s favorite gauge of inflation. And it could certainly affect mortgage rates, possibly appreciably.
The next meeting of the Fed’s rate-setting committee is scheduled to start on Apr. 30 and last two days. So, the PCE price index will be the last inflation report it sees before making decisions.
And index that shows inflation cooling could change the mood at that meeting. True, it’s vanishingly unlikely that a cut to general interest rates will be unveiled on May 1 no matter what.
But a PCE price index that shows inflation cooling could help the Fed to move forward with cuts earlier than expected, which should cause mortgage rates to fall. Unfortunately, one that suggests inflation remains hot or is getting hotter could send those rates higher.
I’ll brief you more fully on each potentially significant report on the day before it’s published.
Don’t forget you can always learn more about what’s driving mortgage rates in the most recent weekend edition of this daily report. These provide a more detailed analysis of what’s happening. They are published each Saturday morning soon after 10 a.m. (ET) and include a preview of the following week.
Recent trends
According to Freddie Mac’s archives, the weekly all-time lowest rate for 30-year, fixed-rate mortgages was set on Jan. 7, 2021, when it stood at 2.65%. The weekly all-time high was 18.63% on Sep. 10, 1981.
Freddie’s Apr. 18 report put that same weekly average at 7.1%, up from the previous week’s 6.88%. But note that Freddie’s data are almost always out of date by the time it announces its weekly figures.
Expert forecasts for mortgage rates
Looking further ahead, Fannie Mae and the Mortgage Bankers Association (MBA) each has a team of economists dedicated to monitoring and forecasting what will happen to the economy, the housing sector and mortgage rates.
And here are their rate forecasts for the four quarters of 2024 (Q1/24, Q2/24 Q3/24 and Q4/24).
The numbers in the table below are for 30-year, fixed-rate mortgages. Fannie’s were updated on Mar. 19 and the MBA’s on Apr. 18.
Forecaster
Q1/24
Q2/24
Q3/24
Q4/24
Fannie Mae
6.7%
6.7%
6.6%
6.4%
MBA
6.8%
6.7%
6.6%
6.4%
Of course, given so many unknowables, both these forecasts might be even more speculative than usual. And their past record for accuracy hasn’t been wildly impressive.
Important notes on today’s mortgage rates
Here are some things you need to know:
Typically, mortgage rates go up when the economy’s doing well and down when it’s in trouble. But there are exceptions. Read ‘How mortgage rates are determined and why you should care’
Only “top-tier” borrowers (with stellar credit scores, big down payments, and very healthy finances) get the ultralow mortgage rates you’ll see advertised
Lenders vary. Yours may or may not follow the crowd when it comes to daily rate movements — though they all usually follow the broader trend over time
When daily rate changes are small, some lenders will adjust closing costs and leave their rate cards the same
Refinance rates are typically close to those for purchases.
A lot is going on at the moment. And nobody can claim to know with certainty what will happen to mortgage rates in the coming hours, days, weeks or months.
Find your lowest mortgage rate today
You should comparison shop widely, no matter what sort of mortgage you want. Federal regulator the Consumer Financial Protection Bureau found in May 2023:
“Mortgage borrowers are paying around $100 a month more depending on which lender they choose, for the same type of loan and the same consumer characteristics (such as credit score and down payment).”
In other words, over the lifetime of a 30-year loan, homebuyers who don’t bother to get quotes from multiple lenders risk losing an average of $36,000. What could you do with that sort of money?
Verify your new rate
Mortgage rate methodology
The Mortgage Reports receives rates based on selected criteria from multiple lending partners each day. We arrive at an average rate and APR for each loan type to display in our chart. Because we average an array of rates, it gives you a better idea of what you might find in the marketplace. Furthermore, we average rates for the same loan types. For example, FHA fixed with FHA fixed. The end result is a good snapshot of daily rates and how they change over time.
How your mortgage interest rate is determined
Mortgage and refinance rates vary a lot depending on each borrower’s unique situation.
Factors that determine your mortgage interest rate include:
Overall strength of the economy — A strong economy usually means higher rates, while a weaker one can push current mortgage rates down to promote borrowing
Lender capacity — When a lender is very busy, it will increase rates to deter new business and give its loan officers some breathing room
Property type (condo, single-family, town house, etc.) — A primary residence, meaning a home you plan to live in full time, will have a lower interest rate. Investment properties, second homes, and vacation homes have higher mortgage rates
Loan-to-value ratio (determined by your down payment) — Your loan-to-value ratio (LTV) compares your loan amount to the value of the home. A lower LTV, meaning a bigger down payment, gets you a lower mortgage rate
Debt-To-Income ratio — This number compares your total monthly debts to your pretax income. The more debt you currently have, the less room you’ll have in your budget for a mortgage payment
Loan term — Loans with a shorter term (like a 15-year mortgage) typically have lower rates than a 30-year loan term
Borrower’s credit score — Typically the higher your credit score is, the lower your mortgage rate, and vice versa
Mortgage discount points — Borrowers have the option to buy discount points or ‘mortgage points’ at closing. These let you pay money upfront to lower your interest rate
Remember, every mortgage lender weighs these factors a little differently.
To find the best rate for your situation, you’ll want to get personalized estimates from a few different lenders.
Verify your new rate. Start here
Are refinance rates the same as mortgage rates?
Rates for a home purchase and mortgage refinance are often similar.
However, some lenders will charge more for a refinance under certain circumstances.
Typically when rates fall, homeowners rush to refinance. They see an opportunity to lock in a lower rate and payment for the rest of their loan.
This creates a tidal wave of new work for mortgage lenders.
Unfortunately, some lenders don’t have the capacity or crew to process a large number of refinance loan applications.
In this case, a lender might raise its rates to deter new business and give loan officers time to process loans currently in the pipeline.
Also, cashing out equity can result in a higher rate when refinancing.
Cash-out refinances pose a greater risk for mortgage lenders, so they’re often priced higher than new home purchases and rate-term refinances.
Check your refinance rates today. Start here
How to get the lowest mortgage or refinance rate
Since rates can vary, always shop around when buying a house or refinancing a mortgage.
Comparison shopping can potentially save thousands, even tens of thousands of dollars over the life of your loan.
Here are a few tips to keep in mind:
1. Get multiple quotes
Many borrowers make the mistake of accepting the first mortgage or refinance offer they receive.
Some simply go with the bank they use for checking and savings since that can seem easiest.
However, your bank might not offer the best mortgage deal for you. And if you’re refinancing, your financial situation may have changed enough that your current lender is no longer your best bet.
So get multiple quotes from at least three different lenders to find the right one for you.
2. Compare Loan Estimates
When shopping for a mortgage or refinance, lenders will provide a Loan Estimate that breaks down important costs associated with the loan.
You’ll want to read these Loan Estimates carefully and compare costs and fees line-by-line, including:
Interest rate
Annual percentage rate (APR)
Monthly mortgage payment
Loan origination fees
Rate lock fees
Closing costs
Remember, the lowest interest rate isn’t always the best deal.
Annual percentage rate (APR) can help you compare the ‘real’ cost of two loans. It estimates your total yearly cost including interest and fees.
Also, pay close attention to your closing costs.
Some lenders may bring their rates down by charging more upfront via discount points. These can add thousands to your out-of-pocket costs.
3. Negotiate your mortgage rate
You can also negotiate your mortgage rate to get a better deal.
Let’s say you get loan estimates from two lenders. Lender A offers the better rate, but you prefer your loan terms from Lender B. Talk to Lender B and see if they can beat the former’s pricing.
You might be surprised to find that a lender is willing to give you a lower interest rate in order to keep your business.
And if they’re not, keep shopping — there’s a good chance someone will.
Fixed-rate mortgage vs. adjustable-rate mortgage: Which is right for you?
Mortgage borrowers can choose between a fixed-rate mortgage and an adjustable-rate mortgage (ARM).
Fixed-rate mortgages (FRMs) have interest rates that never change unless you decide to refinance. This results in predictable monthly payments and stability over the life of your loan.
Adjustable-rate loans have a low interest rate that’s fixed for a set number of years (typically five or seven). After the initial fixed-rate period, the interest rate adjusts every year based on market conditions.
With each rate adjustment, a borrower’s mortgage rate can either increase, decrease, or stay the same. These loans are unpredictable since monthly payments can change each year.
Adjustable-rate mortgages are fitting for borrowers who expect to move before their first rate adjustment, or who can afford a higher future payment.
In most other cases, a fixed-rate mortgage is typically the safer and better choice.
Remember, if rates drop sharply, you are free to refinance and lock in a lower rate and payment later on.
How your credit score affects your mortgage rate
You don’t need a high credit score to qualify for a home purchase or refinance, but your credit score will affect your rate.
This is because credit history determines risk level.
Historically speaking, borrowers with higher credit scores are less likely to default on their mortgages, so they qualify for lower rates.
So, for the best rate, aim for a credit score of 720 or higher.
Mortgage programs that don’t require a high score include:
Conventional home loans — minimum 620 credit score
FHA loans — minimum 500 credit score (with a 10% down payment) or 580 (with a 3.5% down payment)
VA loans — no minimum credit score, but 620 is common
USDA loans — minimum 640 credit score
Ideally, you want to check your credit report and score at least 6 months before applying for a mortgage. This gives you time to sort out any errors and make sure your score is as high as possible.
If you’re ready to apply now, it’s still worth checking so you have a good idea of what loan programs you might qualify for and how your score will affect your rate.
You can get your credit report from AnnualCreditReport.com and your score from MyFico.com.
How big of a down payment do I need?
Nowadays, mortgage programs don’t require the conventional 20 percent down.
Indeed, first-time home buyers put only 6 percent down on average.
Down payment minimums vary depending on the loan program. For example:
Conventional home loans require a down payment between 3% and 5%
FHA loans require 3.5% down
VA and USDA loans allow zero down payment
Jumbo loans typically require at least 5% to 10% down
Keep in mind, a higher down payment reduces your risk as a borrower and helps you negotiate a better mortgage rate.
If you are able to make a 20 percent down payment, you can avoid paying for mortgage insurance.
This is an added cost paid by the borrower, which protects their lender in case of default or foreclosure.
But a big down payment is not required.
For many people, it makes sense to make a smaller down payment in order to buy a house sooner and start building home equity.
Verify your new rate. Start here
Choosing the right type of home loan
No two mortgage loans are alike, so it’s important to know your options and choose the right type of mortgage.
The five main types of mortgages include:
Fixed-rate mortgage (FRM)
Your interest rate remains the same over the life of the loan. This is a good option for borrowers who expect to live in their homes long-term.
The most popular loan option is the 30-year mortgage, but 15- and 20-year terms are also commonly available.
Adjustable-rate mortgage (ARM)
Adjustable-rate loans have a fixed interest rate for the first few years. Then, your mortgage rate resets every year.
Your rate and payment can rise or fall annually depending on how the broader interest rate trends.
ARMs are ideal for borrowers who expect to move prior to their first rate adjustment (usually in 5 or 7 years).
For those who plan to stay in their home long-term, a fixed-rate mortgage is typically recommended.
Jumbo mortgage
A jumbo loan is a mortgage that exceeds the conforming loan limit set by Fannie Mae and Freddie Mac.
In 2023, the conforming loan limit is $726,200 in most areas.
Jumbo loans are perfect for borrowers who need a larger loan to purchase a high-priced property, especially in big cities with high real estate values.
FHA mortgage
A government loan backed by the Federal Housing Administration for low- to moderate-income borrowers. FHA loans feature low credit score and down payment requirements.
VA mortgage
A government loan backed by the Department of Veterans Affairs. To be eligible, you must be active-duty military, a veteran, a Reservist or National Guard service member, or an eligible spouse.
VA loans allow no down payment and have exceptionally low mortgage rates.
USDA mortgage
USDA loans are a government program backed by the U.S. Department of Agriculture. They offer a no-down-payment solution for borrowers who purchase real estate in an eligible rural area. To qualify, your income must be at or below the local median.
Bank statement loan
Borrowers can qualify for a mortgage without tax returns, using their personal or business bank account as evidence of their financial circumstances. This is an option for self-employed or seasonally-employed borrowers.
Portfolio/Non-QM loan
These are mortgages that lenders don’t sell on the secondary mortgage market. And this gives lenders the flexibility to set their own guidelines.
Non-QM loans may have lower credit score requirements or offer low-down-payment options without mortgage insurance.
Choosing the right mortgage lender
The lender or loan program that’s right for one person might not be right for another.
Explore your options and then pick a loan based on your credit score, down payment, and financial goals, as well as local home prices.
Whether you’re getting a mortgage for a home purchase or a refinance, always shop around and compare rates and terms.
Typically, it only takes a few hours to get quotes from multiple lenders. And it could save you thousands in the long run.
Time to make a move? Let us find the right mortgage for you
Current mortgage rates methodology
We receive current mortgage rates each day from a network of mortgage lenders that offer home purchase and refinance loans. Those mortgage rates shown here are based on sample borrower profiles that vary by loan type. See our full loan assumptions here.
When it comes to saving for retirement, you have many options to choose from. But one that you may not have considered is investing in gold—namely, a gold IRA.
A gold IRA is a simple yet innovative type of individual retirement account (IRA). Instead of the conventional holdings of stocks and bonds, it invests in precious metals, primarily gold, but also in silver and platinum.
Investing in a gold IRA presents a potential opportunity for safeguarding your savings from economic turmoil and expanding the diversity of your asset portfolio. Nevertheless, it’s important to keep in mind that a gold IRA may not be a suitable option for everyone, and a thorough evaluation of your personal financial situation is crucial before making an investment decision.
This article will provide you with a comprehensive understanding of gold IRAs and equip you with the knowledge necessary to make an informed investment choice.
What is a Gold IRA?
A gold IRA, also known as a precious metals IRA, is a type of investment vehicle that gives you the ability to hold physical gold, silver, and other valuable metals. You have the option of funding this account either with pre-taxed money or as a Roth IRA with post-tax funds.
Your savings will not be invested in stocks, bonds, or mutual funds but rather in precious metal coins or bullion, providing a tangible form of investment. The tax rules and procedures for a precious metals IRA are similar to those of any other IRA.
Investing in gold bullion and other precious metals goes beyond just IRAs. Some investors choose to purchase stocks or exchange-traded funds (ETFs) in gold mining companies or precious metal funds. However, the majority of gold investors prefer to keep their investments in physical precious metals.
Types of Gold IRAs
There are three main types of gold IRAs: traditional, Roth, and SEP.
Traditional gold IRA: – Traditional gold IRAs are funded with pre-tax dollars and require you to pay income tax on withdrawals in retirement.
Roth gold IRA – Roth IRAs are funded with after-tax dollars and allow for tax-free growth and tax-free withdrawals in retirement.
SEP gold IRA – SEP IRAs are intended for self-employed or small business owners and are funded with pre-tax dollars. Contribution limits are different, and business owners can contribute on behalf of their employees.
The IRS has strict guidelines for the kinds of metals that can be included in a gold IRA. The only precious metals that can be included are gold, silver, platinum, and palladium.
Here is an overview of each of the IRS-approved precious metals, as well as the requirements for each.
1. Gold
To be eligible for inclusion in a self-directed gold IRA, gold coins or bars must adhere to stringent purity standards, with a minimum of 99.5% purity. Any gold that fails to meet this standard will be rejected.
Should the gold pass the purity test, it must be securely stored in an approved depository, which is a specialized facility specifically designed to protect precious metals.
Having a trusted and IRS-approved custodian is also a requirement, who will serve as the trustee of the IRA and oversee the safekeeping of the gold. Some of the most sought-after gold coins and bars for IRAs include:
American Gold Eagle coins
American Gold Buffalo coins
Australian Gold Kangaroo/Nugget coins
Austrian Gold Philharmonic coins
Johnson Matthey Gold bar
Valcambi Gold CombiBar
Canadian Gold Maple Leaf coins
Credit Suisse Gold bars
2. Silver
The purity of silver coins must be at least 99.9% to be eligible for deposit in a gold IRA. The following is a list of silver coins and bars that meet the approval criteria for inclusion in an IRA:
American Silver Eagle coins
Australian Kookaburra Silver coins
Austrian Philharmonic Silver coins
Canadian Silver Maple Leaf coins
Mexican Silver Libertad coins
Johnson Matthey Silver bar
Royal Canadian Mint Silver bar
3. Platinum
Platinum coins and bars must meet or exceed a purity standard of 99.95%. Here is a list of IRA-approved platinum bars and coins to consider:
American Eagle Platinum coins
Australian Koala Platinum coins
Canadian Maple Leaf Platinum coins
Isle of Man Noble coins
4. Palladium
And finally, palladium must meet a purity standard of 99.95% or higher. Here is a list of IRA-approved palladium bars and coins:
Canadian Palladium Maple Leaf coins
Russian Ballerina Palladium coins
Baird Palladium bars
Credit Suisse Palladium bars
If you’re interested in investing in a gold IRA, you need to be mindful of the accepted metals. While there may be other precious metal bars and coins that are sought after by collectors, they may not be eligible for investment within a gold IRA. To ensure you’re making the right investment decisions, it’s best to work with a trusted precious metals company.
To avoid any issues, make sure to double-check with your IRA company before investing in any precious metals you’re unsure about. Here’s a list of metals that are not approved for investment in a gold IRA:
Austrian Corona
Belgian Franc
British Sovereign and Britannia
Chilean Peso
Chinese Panda coins
Dutch Guilder
French 20 Franc
Hungarian Korona
Italian Lira
Mexican Peso
South African Krugerrand
Swiss Franc
Pros and Cons of Gold IRAs
Before investing in a gold IRA, it’s important to weigh the pros and cons. Here are some key factors to consider before making a decision.
Pros
Since the Financial Crisis of 2008, gold IRAs have become a popular investment option for people looking to diversify outside the stock market. Many people believe that gold is a good way to protect yourself against inflation.
And gold IRAs are not as difficult to invest in as they were in the past. Due to increased demand, there are more legitimate gold IRA companies available that will help you buy and manage your gold and precious metals investment.
Cons
One of the biggest downsides to opening a gold IRA is that the startup costs can be high. Plus, gold doesn’t pay dividends or interest, which kind of defeats the purpose of putting it in a tax-advantaged investment.
Plus, many people find it tricky to make withdrawals on gold IRAs, since gold isn’t a liquid asset.
You also need to be sure that you’re working with a reputable company that knows what they’re doing. Otherwise, it’s easy to fall victim to scam artists.
How to Get Started With a Gold IRA
Starting a gold IRA requires opening a self-directed IRA account, which offers greater flexibility in terms of investment options. You’ll be responsible for managing this retirement account, but you’ll need the assistance of a broker for buying gold and securing your assets.
When selecting a custodian, consider a bank, credit union, or brokerage firm that has been approved by a state or federal agency. You may also ask your gold dealer for recommendations on trusted brokers.
Start-Up Costs to Open a Gold IRA
Unlike traditional IRAs, a gold IRA comes with a few extra expenses. Here are some of the most significant expenses you’ll need to know about:
The markup fee: When you buy gold or precious metals, you may have to pay a markup fee. This is a one-time upfront fee, and it will vary based on the vendor you choose.
IRA setup fee: The setup fee is another one-time fee you’ll pay to set up your IRA account. Again, this will vary depending on the broker you choose. However, it will likely be more costly because not every firm deals with gold IRAs.
Custodian fees: You’ll have to pay an annual fee for the custodian who’s managing your gold IRA.
Storage fees: Your gold must be stored in a secure, approved location. For that reason, you’ll have to pay annual storage fees.
Bottom Line
If you seek to diversify your portfolio beyond the stock market, a gold IRA could be a suitable option. Precious metals like gold are often considered secure investments and can act as a safeguard against inflation.
On the other hand, other methods of asset diversification may be more economical and less cumbersome. Some people regard gold as a poor choice for a tax-deferred investment, as it does not produce income.
If you opt for a gold IRA, be sure to thoroughly research your metals dealer and custodian, to ensure the protection of your investment and to steer clear of scams.
Frequently Asked Questions
Is a gold IRA a good investment?
It depends on your personal financial circumstances and investment objectives. While some view gold as a way to hedge against inflation and diversify their portfolio, others may not find value in physically investing in the precious metal. To make an informed decision, it’s crucial to thoroughly examine both the potential risks and benefits before investing in a gold IRA.
How do I set up a gold IRA?
To set up a gold IRA account, you will need to find a gold IRA company that specializes in setting up precious metals IRAs. Gold IRA companies will provide you with the necessary paperwork and guidance to open and fund your account.
Are there any restrictions on what types of gold I can hold in my IRA?
Yes, there are specific rules for the types of gold that can be held in a precious metals IRA. The gold must be at least 99.5% pure and must be in the form of coins or bars from an approved refinery or mint. Some common examples of approved gold coins include the American Gold Eagle and the Canadian Gold Maple Leaf.
What is the difference between a traditional IRA, Roth IRA, and SEP IRA?
A traditional IRA is a tax-advantaged account that allows you to contribute pre-tax dollars and potentially receive a tax deduction on your contributions.
A Roth IRA, on the other hand, is a retirement account that accepts post-tax contributions, but all qualified withdrawals, including earnings, are tax-free.
Lastly, a SEP IRA is a retirement savings plan designed for self-employed individuals and small business owners. It enables them to make tax-deductible contributions to a traditional IRA for themselves and their employees.
Connecticut’s rich historical heritage is evident in its well-preserved landmarks and museums. For example, the Mark Twain House in Hartford offers a glimpse into the life of one of America’s most beloved authors. This deep historical context provides residents and visitors alike with a unique window into the past.
2. Con: High cost of living
Connecticut’s cost of living surpasses the national average, with notable spikes observed in housing, healthcare, and transportation expenses. In Greenwich specifically, the median sale price stands at $2,181,250, while the average rental price for a one-bedroom apartment hovers around $3,710, underscoring the challenges of affordability in the area.
3. Pro: Access to quality education
Connecticut is home to some of the nation’s top educational institutions, including Yale University in New Haven. This access to quality education from primary levels through to higher education institutions ensures residents have ample opportunities for academic and professional development.
4. Con: Winter weather
Connecticut’s winter weather can be harsh and unforgiving, with frequent snowstorms and freezing temperatures making outdoor activities challenging. Residents often contend with icy roads, hazardous driving conditions, and increased heating costs during the colder months. Cities like Waterbury often face significant snow removal challenges, impacting residents’ mobility and comfort.
5. Pro: Beautiful landscapes
Connecticut boasts natural beauty that captivates residents and visitors alike, from the picturesque coastline along Long Island Sound to the tranquil forests of the Litchfield Hills. Iconic destinations such as Gillette Castle State Park, with its stunning architecture set amidst lush woodlands, and the charming coastal town of Mystic, known for its historic seaport and maritime heritage, showcase the state’s diverse landscapes.
6. Con: Traffic congestion
Major cities in Connecticut and the surrounding areas, such as Stamford and Hartford, often experience heavy traffic congestion. This can lead to long commute times and increased stress for residents. The congestion is particularly noticeable during peak hours on highways like I-95 and Route 15.
7. Pro: Vibrant arts and culture scene
Connecticut’s vibrant arts and culture scene thrives with a plethora of museums, galleries, and theaters that cater to diverse tastes and interests. For instance, the Wadsworth Atheneum Museum of Art in Hartford stands as the oldest public art museum in the United States, showcasing a rich collection spanning thousands of years. Additionally, the Goodspeed Opera House in East Haddam is renowned for its world-class productions of musical theater, attracting theater enthusiasts from across the region.
8. Con: Limited nightlife
Compared to larger metropolitan areas, some parts of Connecticut offer limited options for nightlife. While cities like New Haven and Hartford have some lively spots, smaller towns may lack the variety and vibrancy found in bigger cities, leading to fewer entertainment options in the evenings.
9. Pro: Outdoor recreation
Connecticut’s outdoor recreation opportunities are abundant, offering residents and visitors a chance to explore the state’s natural wonders. From hiking along the Appalachian Trail to kayaking on the Connecticut River, outdoor enthusiasts have endless options to enjoy the great outdoors. Moreover, destinations like Sleeping Giant State Park with its scenic trails and Hammonasset Beach State Park with its sprawling beaches provide opportunities for hiking, swimming, picnicking, and birdwatching.
10. Con: Seasonal allergies
Connecticut’s seasonal allergies can pose challenges for residents, particularly during the spring and fall months. Pollen from trees, grasses, and weeds can trigger allergic reactions such as hay fever, sneezing, and itchy eyes for those sensitive to airborne allergens.
11. Pro: Transportation options
Connecticut’s transportation options offer residents convenient and accessible ways to navigate the state and beyond. With an extensive network of highways, including Interstate 95 and Interstate 91, commuting to neighboring cities like New York City and Boston is relatively straightforward. Additionally, the state’s Metro-North Railroad provides efficient rail service connecting major cities, while local bus systems offer reliable public transportation within urban areas.
12. Con: Natural disasters
Connecticut faces occasional natural disasters, predominantly hurricanes and severe storms, which can pose risks to residents and property. Coastal areas are particularly vulnerable to flooding and storm surges during hurricane season, necessitating preparedness and evacuation plans. Additionally, the state experiences occasional earthquakes, although they are less common and typically result in minimal damage.
Methodology : The population data is from the United States Census Bureau, walkable cities are from Walk Score, and rental data is from ApartmentGuide.
WASHINGTON — Inflation and uncertainty surrounding the direction of federal policy on trade, spending and other issues are banks’ top financial stability concerns, the Federal Reserve Board said in a report released Friday.
For its semiannual report on financial stability, the Fed surveyed a range of financial professionals — including broker-dealers, investment fund managers, research and advisory professionals as well as academics — about the top issues facing the financial system. Policy uncertainty emerged as a major new source of anxiety for industry experts — it was cited by 60% of respondents, up from the just 24% of respondents who cited it as a top concern in the Fed’s last survey in October 2023.
Since 2019, the Fed has issued two reports on financial stability per year, usually releasing one in the spring and another in the fall.
Persistent inflation and high interest rates remained the top concern across the board, with 72% of respondents listing it as their primary concern — the same percentage as in the October report. The report indicated that interest rates may remain elevated above current market expectations for an extended period and that persistent inflation could prompt a more stringent monetary policy, causing increased volatility in financial markets and adjustments in asset valuations.
But the rise of policy uncertainty — including unpredictability stemming from fluctuating trade policies, influenced by geopolitical tensions such as the conflict in the Middle East and Russia’s war against Ukraine that has lasted more than two years — was an unexpected source of market disruption for many survey respondents. Respondents also flagged the upcoming U.S. elections in November as a source of stress.
“Further escalation of geopolitical tensions or policy uncertainty could reduce economic activity, boost inflation, and heighten volatility in financial markets,” the report said. “The global financial system could be affected by a pullback from risk-taking, declines in asset prices, and losses for exposed U.S. and foreign businesses and investors.”
Concerns about the credit quality of commercial real estate — which was the No. 2 concern cited in the October report — was cited as a top concern among 56% of the survey’s respondents. But that fell from 72% in the October report. The Fed noted that prices across all sectors of CRE continued to decline in the second half of 2023, and the report makes clear the full impact of CRE price drops have yet to be reflected in the data.
“These transaction-based price measures likely do not yet fully reflect the deterioration in CRE market prices because, rather than realizing losses, many owners wait for more favorable conditions to put their properties on the market,” noted the report. “Capitalization rates at the time of property purchase, which measure the annual income of commercial properties relative to their prices, moved modestly higher but remained at historically low levels, suggesting that prices remain high relative to fundamentals.”
Banking sector instability continued to feature prominently despite the report noting high levels of liquidity and low funding risks in the sector since the October report.
While the Fed’s emergency lending facility, the Bank Term Funding Program, ceased operations on March 11, the report noted the BTFP continues to reduce liquidity pressures for depositories. The report said mostly small institutions with under $10 billion of assets — representing 95% of beneficiaries — benefited from the program.