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.
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.
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.
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As we head into peak home-buying season, signs of life have begun to spring up in the housing market.
Even so, still-high mortgage rates and home prices amid historically low housing stock continue to put homeownership out of reach for many.
Moreover, the National Association of Realtors agreed to a monumental $418 million settlement on March 15 following a verdict favoring home sellers in a class action lawsuit. Still subject to court approval, the settlement requires changes to broker commissions that will upend the buying and selling model that has been in place for years.
Housing Market Forecast for 2024
Elevated mortgage rates, out-of-reach home prices and record-low housing stock are the perennial weeds that experts say hopeful home buyers can expect to contend with this spring—and beyond.
“The housing market is likely to continue to face the dual affordability constraints of high home prices and elevated interest rates in 2024,” said Doug Duncan, senior vice president and chief economist at Fannie Mae, in an emailed statement. “Hotter-than-expected inflation data and strong payroll numbers are likely to apply more upward pressure to mortgage rates this year than we’d previously forecast.”
Despite ongoing affordability hurdles, Fannie Mae forecasts an increase in home sales transactions compared to last year. Experts also anticipate a slower rise in home prices this year compared to recent years, but price fluctuations will continue to vary regionally and depend strongly on local market supply.
U.S. home prices declined in January for the third consecutive month due to high borrowing costs, according to the latest S&P CoreLogic Case-Shiller Home Price Index. But prices year-over-year jumped 6%—the fastest annual rate since 2022.
Chief economist at First American Financial Corporation Mark Fleming predicts a “flat stretch” ahead.
“If the 2020-2021 housing market was too hot, then the 2023 market was probably too cold, but 2024 won’t yet be just right,” Fleming said in his 2024 forecast.
Will the Housing Market Finally Recover in 2024?
For a housing recovery to occur, several conditions must unfold.
“For the best possible outcome, we’d first need to see inventories of homes for sale turn considerably higher,” says Keith Gumbinger, vice president at online mortgage company HSH.com. “This additional inventory, in turn, would ease the upward pressure on home prices, leveling them off or perhaps helping them to settle back somewhat from peak or near-peak levels.”
And, of course, mortgage rates would need to cool off—which experts say is imminent despite rates edging back up toward 7%. For the week ending April 11, the 30-year fixed mortgage rate stood at 6.88%, according to Freddie Mac.
However, when mortgage rates finally go on the descent, Gumbinger says don’t hope they cool too quickly. Rapidly falling rates could create a surge of demand that wipes away any inventory gains, causing home prices to rebound.
“Better that rate reductions happen at a metered pace, incrementally improving buyer opportunities over a stretch of time, rather than all at once,” Gumbinger says.
He adds that mortgage rates returning to a more “normal” upper 4% to lower 5% range would also help the housing market, over time, return to 2014-2019 levels. Yet, Gumbinger predicts it could be a while before we return to those rates.
Nonetheless, Kuba Jewgieniew, CEO of Realty ONE Group, a real estate brokerage company, is optimistic about a recovery this year.
“[W]e’re definitely looking forward to a better housing market in 2024 as interest rates start to settle around 6% or even lower,” says Jewgieniew.
NAR Settlement Rocks the Residential Real Estate Industry
Following years of litigation, the National Association of Realtors (NAR) has agreed to pay $418 million to settle a series of antitrust lawsuits filed in 2019 on behalf of home sellers.
The plaintiffs claimed that the leading national trade association for real estate brokers and agents “conspired to require home sellers to pay the broker representing the buyer of their homes in violation of federal antitrust law.”
Though the landmark settlement is subject to court approval, most consider it a done deal.
The settlement requires NAR to enact new rules, including prohibiting offers of broker compensation on multiple listing services (MLS), the private databases that allow local real estate brokers to publish and share information about residential property listings. The rule is set to take effect in mid-July, once the settlement receives judge approval.
Moreover, sellers will no longer be required to pay buyer broker commissions and real estate agents participating in the MLS must establish written representation agreements with their buyer clients.
NAR denies any wrongdoing and maintains that its current policies benefit buyers and sellers. The organization believes it’s not liable for seller claims related to broker commissions, stating that it has never set commissions and that commissions have always been negotiable.
How Will the New Rules Impact the Buying and Selling Process?
Per the settlement’s terms, the costs associated with buying and selling a home are set to change dramatically.
“The primary things that will change are the decoupling of the seller commission and the buyer commission in the MLS,” says Rita Gibbs, a Realtor at Realty One Group Integrity in Tucson. “It’s gonna cause some chaos.”
While sellers will no longer be able to offer broker compensation in the MLS, there’s no rule prohibiting off-MLS negotiations. Because of this, Gibbs suspects buyers and sellers will continue offering broker compensation off the MLS.
The Department of Justice confirmed it will permit listing brokers to display compensation details on their websites. However, buyer agents will need to undergo the tedious task of visiting countless broker websites to find who’s offering what.
Michael Gorkowski, a Virginia-based real estate agent with Compass, is also trying to figure out how to manage the potential ruling.
“We often work with buyers for many months and sometimes years before they find exactly what they’re looking for,” Gorkowski says. “So in a case where a seller isn’t offering a co-broker commission, we will have to negotiate that the buyer pays an agreed-upon commission prior to starting their search.”
The Changes Will Impact These Home Buyers Most
“In the short term, it is absolutely going to injure buyers, especially FHA and VA buyers,” Gibbs says. “With rare exception, these buyers are not in a position to pay for their own agent.”
Gibbs says that if sellers don’t offer compensation, many buyers who can’t otherwise afford to pay a broker will choose to go unrepresented.
Gorkowski notes that veterans taking out VA loans face a unique challenge under the new rules. “[P]er the VA requirements, buyers cannot pay so it must be negotiated with the seller for now.”
As a result, NAR is calling on the U.S. Department of Veterans Affairs to revise its policies prohibiting VA buyers from paying broker commissions. Even so, there’s skepticism that the federal government will be able to implement changes in time for the July deadline.
Gibbs and Gorkowski are among the many agents especially concerned about first-time home buyers. After July, first-time and VA buyers will be required to sign a buyer-broker agreement stating that they will compensate their broker—but Gibbs says many won’t have the means to do so.
In this situation, agents would likely only show buyers homes where sellers are offering compensation.
“This is a very troubling situation,” Gorkowski says.
Housing Inventory Forecast for 2024
With many homeowners “locked in” at ultra-low interest rates or unwilling to sell due to high home prices, demand continues to outpace housing supply—and likely will for a while—even as some homeowners may finally be forced to sell due to major life events such as divorce, job changes or a growing family.
“I don’t expect to see a meaningful increase in the supply of existing homes for sale until mortgage rates are back down in the low 5% range, so probably not in 2024,” says Rick Sharga, founder and CEO of CJ Patrick Company, a market intelligence and business advisory firm.
Housing stock remains near historic lows—especially entry-level supply—which has propped up demand and sustained ultra-high home prices. Here’s what the latest home values look like around the country.
Yet, some hopeful housing stock signs have begun to sprout:
Existing inventory is showing signs of loosening as impatient buyers and sellers have begun to accept the reality of mortgage rates oscillating between 6% and 7%.
Home-builder outlook also continues to get sunnier, trending back up amid declining mortgage rates and better building conditions.
The most recent National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI), which tracks builder sentiment, saw a fourth consecutive monthly rise, surpassing a crucial threshold with an increase from 48 to 51 in March. A reading of 50 or above means more builders see good conditions ahead for new construction.
At the same time, new single-family building permits ticked up 1% in February—the 13th consecutive monthly increase—according to the latest data from the U.S. Census Bureau and U.S. Department of Housing and Urban Development (HUD).
Residential Real Estate Stats: Existing, New and Pending Home Sales
Though some housing market data indicates signs of growth are in store this spring home-buying season, persistently high mortgage rates may hinder activity from fully flourishing.
Here’s what the latest home sales data has to say.
Existing-Home Sales
Existing-home sales came to life in February, shooting up 9.5% from the month before, according to the latest data from the NAR. Sales dipped 3.3% from a year ago.
Experts attribute the monthly jump to a bump in inventory.
“Additional housing supply is helping to satisfy market demand,” said Lawrence Yun, chief economist at NAR, in the report.
Existing inventory rose 5.9%—logging 1.07 million unsold homes at the end of February. However, there are still only 2.9 months of inventory at the current sales pace. Most experts consider a balanced market falling between four and six months.
Meanwhile, existing home prices continue to soar to unprecedented heights, reaching $384,500, which marks the eighth consecutive month of yearly price increases and a February median home price record.
New Home Sales
Sales of newly constructed single-family houses ticked down by a nominal 0.3% compared to January, but outpaced February 2023 sales by 5.9%, according to the latest U.S. Census Bureau and HUD data.
Amid a high percentage of homeowners still locked in to low mortgage rates, home builders have been picking up the slack.
“New construction continues to be an outsized share of the housing inventory,” said Dr. Lisa Sturtevant, chief economist at Bright MLS, in an emailed statement.
Sturtevant notes that declining new home prices are coming amid a recent trend of builders introducing smaller and more affordable homes to the market.
The median price for a new home in February was $400,500, down 7.6% from a year ago.
Source: U.S. Census Bureau and U.S. Department of Housing and Urban Development
Pending Home Sales
NAR’s Pending Homes Sales Index rose 1.6% in February from the month prior even as mortgage rates approached 7% by the end of the month. Pending transactions declined 7% year-over-year.
A pending home sale marks the point in the home sales transaction when the buyer and seller agree on price and terms. Pending home sales are considered a leading indicator of future closed sales.
The Midwest and South saw monthly transaction gains while the Northeast and West saw declines due to affordability challenges in those higher-cost regions.
“While modest sales growth might not stir excitement, it shows slow and steady progress from the lows of late last year,” said Yun, in the report.
Ongoing Affordability Challenges Could Throw Cold Water on Spring Home-Buying Hopes
Though down from its 2023 high of 7.79%, the average 30-year fixed mortgage rate in 2024 remains well over 6% amid rising home values. As a result, home buyers continue to face affordability challenges.
According to data from its first-quarter 2024 U.S. Home Affordability Report, property data provider Attom found that median-priced single-family homes remain less affordable than the historical average in over 95% of U.S. counties.
For one, the data uncovered that expenses are eating up more than 32% of the average national wage. Common lending guidelines require monthly mortgage payments, property taxes and homeowners insurance to comprise 28% or less of your gross income.
At the same time, home prices and homeownership expenses continue to outpace wage growth.
Consequently, the latest expense-to-wage ratio is hovering at one of the highest points over the past decade, according to the Attom report, despite some slight affordability improvements over the last two quarters.
“Affording a home remains a financial stretch, or a pipe dream, for so many households,” said Rob Barber, CEO at Attom.
Pro Tips for Buyers and Sellers
Here are some expert tips to increase your chances for an optimal outcome in this tight housing market.
Pro Tips for Buying in Today’s Real Estate Market
Hannah Jones, a senior economic research analyst at Realtor.com, offers this expert advice to aspiring buyers:
Know your budget. Instead of focusing on price, figure out how much you can afford as a monthly payment. Your monthly housing payment is influenced by the price of the home, your down payment, mortgage rate, loan term, home insurance and property taxes.
Be flexible about home size and location. Perhaps your budget is sufficient for a small home in your perfect neighborhood, or a larger, newer home further out. Understanding your priorities and having some flexibility can help you move quickly when a suitable home enters the market.
Keep an eye on the market where you hope to buy. Determine the area’s available inventory and price levels. Also, pay attention to how quickly homes sell. Not only will you be tuned in when something great hits the market, you can feel more confident moving forward with purchasing a well-priced home. A real estate agent can help with this.
Don’t be discouraged. Purchasing a home is one of the largest financial decisions you’ll ever make. Approaching the market confidently, armed with good information and grounded expectations will take you far. Don’t let the hustle of the market convince you to buy something that’s not in your budget, or not right for your lifestyle.
Pro Tips for Selling in Today’s Real Estate Market
Gary Ashton, founder of The Ashton Real Estate Group of RE/MAX Advantage, has this expert advice for sellers:
Research comparable home prices in your area. Sellers need to have the most up-to-date pricing intel on comparable homes selling in their market. Know the market competition and price the home competitively. In addition, understand that in some price points it’s a buyer’s market—you’ll need to be prepared to make some concessions.
Make sure your home is in top-notch shape. Homes need to be in great condition to compete and create a strong “online curb appeal.” Well-maintained homes and attractive front yards are major features that buyers look for.
Work with a local real estate agent. A real estate agent or team with a strong local marketing presence and access to major real estate portals can offer significant value and help you land a great deal.
Don’t put off issues that require attention. Prepare the home by making any repairs or improvements. Removing any objections that buyers may see helps focus the buyer on the positive attributes of the home.
Will the Housing Market Crash in 2024?
Despite some areas of the country experiencing monthly price declines, the likelihood of a housing market crash—a rapid drop in unsustainably high home prices due to waning demand—remains low for 2024.
“[T]he record low supply of houses on the market protects against a market crash,” says Tom Hutchens, executive vice president of production at Angel Oak Mortgage Solutions, a non-QM lender.
Moreover, experts point out that today’s homeowners stand on much more secure footing than those coming out of the 2008 financial crisis, with many borrowers having substantial home equity.
“In 2024, I expect we’ll see home appreciation take a step back but not plummet,” says Orphe Divounguy, senior macroeconomist at Zillow Home Loans.
This outlook aligns with what other housing market watchers expect.
“Comerica forecasts that national house prices will rise 2.9% in 2024,” said Bill Adams, chief economist at Comerica Bank, in an emailed statement.
Divounguy also notes that several factors, including Millennials entering their prime home-buying years, wage growth and financial wealth are tailwinds that will sustain housing demand in 2024.
Even so, with fewer homes selling, Dan Hnatkovskyy, co-founder and CEO of NewHomesMate, a marketplace for new construction homes, sees a price collapse within the realm of possibility, especially in markets where real estate investors scooped up numerous properties.
“If something pushes that over the edge, the consequences could be severe,” said Hnatkovskyy, in an emailed statement.
Will Foreclosures Increase in 2024?
In February, total foreclosure filings were down 1% from the previous month but up 8% from a year ago, according to Attom.
“These trends could signify evolving financial landscapes for homeowners, prompting adjustments in market strategies and lending practices,” said Barber, in a report.
Lenders began foreclosure on 22,575 properties in February, up 4% from the previous month and 11% from a year ago. Meanwhile, real estate-owned properties, or REOs, which are homes unsold at foreclosure auctions and taken over by lenders, spiked year-over-year in three states: South Carolina (up 51%), Missouri (up 50%) and Pennsylvania (up 46%).
Despite foreclosure activity trending up nationally and certain areas of the country seeing notable annual increases in REOs, experts generally don’t expect to see a wave of foreclosures in 2024.
“Foreclosure activity is still only at about 60% of pre-pandemic levels … and isn’t likely to be back to 2019 numbers until sometime in mid-to-late 2024,” says Sharga.
The biggest reasons for this, Sharga explains, are the strength of the economy—we’re still seeing low unemployment and steady wage growth—along with excellent loan quality.
Massive home price growth in homeowner equity over the past few years has also helped reduce foreclosures.
Sharga says that some 80% of today’s homeowners have more than 20% equity in their property. So, while there may be more foreclosure starts in 2024—due in part to Covid-era mortgage relief programs phasing out—foreclosure auctions and lender repossessions should remain below 2019 levels.
When Will Be the Best Time To Buy a Home in 2024?
Buying a house—in any market—is a highly personal decision. Because homes represent the largest single purchase most people will make in their lifetime, it’s crucial to be in a solid financial position before diving in.
Use a mortgage calculator to estimate your monthly housing costs based on your down. But if you’re trying to predict what might happen next year, experts say this is probably not the best home-buying strategy.
“The housing market—like so many other markets—is almost impossible to time,“ Divounguy says. “The best time for prospective buyers is when they find a home that they like, that meets their family’s current and foreseeable needs and that they can afford.”
Gumbinger agrees it’s hard to tell would-be homeowners to wait for better conditions.
“More often, it seems the case that home prices generally keep rising, so the goalposts for amassing a down payment keep moving, and there’s no guarantee that tomorrow’s conditions will be all that much better in the aggregate than today’s.”
Divounguy says “getting on the housing ladder” is worthwhile to begin building equity and net worth.
Frequently Asked Questions (FAQs)
Will declining mortgage rates cause home prices to rise?
Declining mortgage rates will likely incentivize would-be buyers anxious to own a home to jump into the market. Expect this increased demand amid today’s tight housing supply to put upward pressure on home prices.
What will happen if the housing market crashes?
Most experts do not expect a housing market crash in 2024 since many homeowners have built up significant equity in their homes. The issue is primarily an affordability crisis. High interest rates and inflated home values have made purchasing a home challenging for first-time homebuyers.
Is it smart to buy real estate before a recession?
If you’re in a financial position to buy a home you plan to live in for the long term, it won’t matter when you buy it because you will live in it through economic highs and lows. However, if you are looking to buy real estate as a short-term investment, it will come with more risk if you buy at the height before a recession.
A central counterparty clearing house (CCP), or Central Counterparty, is a financial institution that facilitates trading activities in European equity and derivative markets. Regional banks typically operate CCPs which are an important part of the international financial system.
CCPs maintain stability and efficiency across financial markets and reduce risks including counterparty, default, and market risks. In the United States, CCPs are called Derivatives Clearing Organizations (DCO) and are regulated by the Commodity Futures Trading Commission (CFTC).
Defining Central Counterparty Clearing Houses
The Bank for International Settlements (BIS) defines a CCP as “a clearing house that interposes itself between counterparties to contracts traded in one or more financial markets, becoming the buyer to every seller and the seller to every buyer and thereby ensuring the future performance of open contracts.” The Eurex is a well known CCP.
Central Counterparty Clearing Houses act as intermediaries between buyers and sellers in financial transactions. They handle clearing and settlements in various types of securities and derivatives transactions to reduce credit risk in the markets. Clearinghouses have existed for more than a century, and act as a way to reduce the risk of OTC derivative transactions.
💡 Quick Tip: How do you decide if a certain trading platform or app is right for you? Ideally, the investment platform you choose offers the features that you need for your investment goals or strategy, e.g., an easy-to-use interface, data analysis, educational tools.
How Central Counterparty Clearing Houses Work
Central Counterparty Clearing Houses guarantee trade terms for buyers and sellers. They help reduce risk for investors by taking on credit risk involved in transactions, so even if a buyer or seller defaults on a transaction the other party doesn’t have as much loss as they might have without the CCP.
When buyers and sellers enter into transactions, they each deposit money with the CCP to cover the amount of the transaction. All CCP users must have a margin account.
In a process called “novation,” the CCP enters into two different contracts, one with the buyer and one with the seller. This provides a guarantee to the other party that if one side doesn’t follow through with the agreement the other side will still receive payment. CCPs typically use margin calls to settle trades if one party does not have the funds in their account.
If the trade falls through, the CCP completes the trade at the current market price. CCPs are for-profit businesses that generate revenue from their members and their transactions. They also work with parent exchanges that require them to remain profitable. Just like other types of businesses, CCPs each operate differently and have different business strategies to attract customers and earn revenue.
For instance, there are different types of derivative products that a CCP might choose to offer. One common business model for CCPs is to cross-margin products in a single netting pool. Parent exchanges place obligations on CCPs, so they need to earn enough revenue to meet those.
The specific financial products offered by a CCP, as well as its risk level, fee structure, and other features lead to different types of members, organizational structure, regulations, and rules for margin balances.
CCPs continue to evolve, offer new products, and become more sophisticated over time. Regulations are also evolving for CCPs which may change how they operate in the future.
Uses of a Central Counterparty Clearing House
CCPs maintain the anonymity of investors’ identities to protect their privacy. They also maintain the privacy of trading firms from buyers and sellers by using electronic order books and protect brokerage firms from the risk of buyers and sellers defaulting on their end of options such as calls or puts.
Another use of CCPs is to lower the number of transactions settled in order to move funds efficiently between investors.
💡 Quick Tip: How to manage potential risk factors in a self-directed investment account? Doing your research and employing strategies like dollar-cost averaging and diversification may help mitigate financial risk when trading stocks.
CCP Members
Financial institutions that want to clear trades through a central counterparty can become members of a particular CCP. Membership allows them to reduce credit risk for their customers and themselves. There are CCPs for different types of financial transactions, so financial institutions can choose the appropriate CCP to apply to for their needs.
CCPs want members that have a significant transaction volume, are creditworthy, and have a trading operation that works efficiently with the system run by the CCP. CCPs also want members to contribute funds to their default fund and secure collateral for their transactions. Each CCP has somewhat different criteria and requirements for membership, and membership information is not always publicly available.
Pros and Cons of CCPs
There are benefits and drawbacks to CCPs. Here are a few important ones to understand:
Pros
CCPs benefit investors in the following ways:
• Reduce counterparty risk
• Maintain stability in financial markets
• Increase efficiency of transactions
• Maintains privacy of customers
Cons
There are also some drawbacks to CCPs for investors, including the following:
• Participation fees
• May not be able to process non-standard transactions
• Some CCPs may not have adequate scale
CCPs and Blockchain
CCPs are now being used with blockchain technology, made popular in cryptocurrency markets, to further reduce risk and costs. An international group of clearing houses launched the Post Trade Distributed Ledger Group launched in 2015. The group studies ways to use blockchain technology for transactions.
Since its formation, the group has expanded to include about 40 global financial institutions collaborating to bring CCPs together with blockchain. The goal of using blockchain technology with CCPs is to reduce margin requirements and risk, reduce operational costs, improve regulatory oversight, and increase the efficiency of trade settlements. Ideally blockchain can help support better settlements, clearing processes, and reporting.
Decentralized exchanges already operate similarly to CCPs as a third party that handles transactions.
The Takeaway
Central counterparty clearing houses help reduce the risk of trading derivatives and securities. They became more popular after the financial crisis as a way for investors to minimize counterparty risk.
While CCPs may help maintain stability in financial markets and increase efficiency, they may also involve participation fees, or may not be able to process non-standard transactions. Understanding the ins and outs of CCPs can be helpful to investors as they learn to navigate the markets.
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FAQ
What is the difference between a clearing house and a central counterparty?
While a CCP acts as a clearing house for transactions, it has an additional step involved before doing so. The two parties involved in a transaction agree upon transaction terms, then the CCP must agree to the terms before they clear the transaction.
What is the CCP margin?
CCPs require customers to make collateral deposits, known as margin deposits, before entering into transactions. This provides them with funds they can use to guarantee trades in the event that one party defaults on an agreement. The initial margin required depends on the customer, the type of financial product, and the particular trade agreement.
Does central clearing reduce counterparty risk?
Central clearing reduces counterparty risk by guaranteeing trades for buyers and sellers. They take on the credit risk involved in transactions by becoming the buyer to every seller and the seller to every buyer.
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Central banks have raised interest rates significantly over the past two
years to combat post-pandemic inflation. Many thought this would lead to a
slowdown in economic activity. Yet, global growth has held broadly steady,
with deceleration only materializing in some countries.
Why are some feeling the pinch from higher rates and not others? The answer
partly lies in differences in mortgage and housing market characteristics.
The effects of rising monetary policy rates on activity partly depend on
housing and mortgage market characteristics, which vary significantly across
countries, as we show in a chapter of our latest World Economic Outlook.
Housing is an important channel of monetary policy transmission. Mortgages
are the largest liability for households, with housing often serving as
their only significant form of wealth. Real estate also accounts for a large
share of consumption, investment, employment, and consumer prices in most
economies.
To assess how key housing characteristics impact the effects of monetary
policy on activity, our research leverages new data on housing and mortgage
markets compiled across countries: we find that those characteristics vary
significantly across countries. For example, the share of fixed-rate
mortgages in all country-level mortgages can vary from close to zero in
South Africa to more than 95 percent in Mexico or the United States.
Our results indicate that monetary policy has greater effects on activity in
countries where the share of fixed-rate mortgages is low. This is due to
homeowners seeing their monthly payments rise with monetary policy rates if
their mortgage rates adjust. By contrast, households with fixed-rate
mortgages will not see any immediate difference in their monthly payments
when policy rates change.
The effects of monetary policy are also stronger in countries where
mortgages are larger compared to home values, and in countries where
household debt is high as a share of GDP. In such settings, more households
will be exposed to changes in mortgage rates, and the effects will be
stronger if their debt is higher relative to their assets.
Housing market characteristics also matter: the transmission of monetary
policy is stronger where housing supply is more restricted. For example,
lower rates will decrease borrowing costs for first-time home buyers and
increase demand. Where supply is restricted, this will lead to home price
appreciation. Existing owners will see their wealth increase as a result,
leading them to consume more, including if they can use their home as
collateral to borrow more.
The same holds true where home prices have recently been overvalued. Sharp
price increases are often driven by overly optimistic views about future
house prices. These are typically accompanied by excessive leverage,
prompting spirals of falling home prices and foreclosures when monetary
policy tightens, which can lead to starker income and consumption declines.
Weaker housing transmission
Mortgage and real estate markets have undergone several shifts since the
global financial crisis and the pandemic. At the beginning of the recent
hiking cycle and after a long period of low interest rates, mortgage
interest payments were historically low, the average maturity was long, and
the average share of fixed-rate mortgages was high in many countries. In
addition, the pandemic led to population shifts away from city centers and
to relatively less-supply-constrained areas.
As a result, the housing channels of monetary policy may have weakened, or
at least been delayed, in several countries.
Country experiences vary widely. Changes in mortgage market characteristics
in countries such as Canada and Japan suggest a strengthening of the
transmission of monetary policy through housing. This is driven mainly by a
declining share of fixed-rate mortgages, an increase in debt, and more
constrained housing supply. By contrast, transmission seems to have weakened
in countries such as Hungary, Ireland, Portugal, and the United States,
where characteristics have moved in the opposite direction.
Calibrating policy
Our findings suggest that a deep, country-specific understanding of housing
channels is important to help calibrate and adjust monetary policy. In
countries where the housing channels are strong, monitoring housing market
developments and changes in household debt service can help identify early
signs of overtightening. Where monetary policy transmission is weak, more
forceful early action can be taken when signs of overheating and
inflationary pressures first emerge.
What about now? Most central banks have made significant progress toward
their inflation target. It could follow from the discussion that, if
transmission is weak, erring on the side of too much tightening is always
less costly. However, overtightening, or leaving rates higher for longer,
could nevertheless be a greater risk now.
While fixed-rate mortgages have indeed become more common in many countries,
fixation periods are often short. Over time, and as rates on these mortgages
reset, monetary policy transmission could suddenly become more effective and
so depress consumption, especially where households are heavily indebted.
The longer time rates are kept high, the greater the likelihood that
households will feel the pinch, even where they have so far been relatively
sheltered.
—This blog is based on Chapter 2 of the April 2024 World Economic
Outlook, “Feeling the pinch? Tracing the effects of monetary policy
through housing markets.” The authors of the chapter are Mehdi Benatiya
Andaloussi, Nina Biljanovska, Alessia De Stefani, and Rui Mano with
support from Ariadne Checo de los Santos, Eduardo Espuny Diaz, Pedro
Gagliardi, Gianluca Yong, and Jiaqi Zhao. Amir Kermani was an external
consultant and Jesper Lindé consulted on the modeling.
The Federal Reserve’s recent data says the average credit card interest rate is 21.47%, which is a high number by most standards. If you never carry a balance or take out cash advances, it may not be a big deal for you, but if you do, it’s worth paying attention to the average credit interest rate. Doing so could help you anticipate and potentially budget for increased interest payments.
Here, you’ll learn more about credit card interest rates and how they can impact your financial life.
What Is the Average Credit Card Interest Rate?
The average interest rate for credit cards is 21.47%, as mentioned above, as of the start of 2024. Rates have been steadily increasing in recent years — in November 2021, the average rate for credit cards was 14.51%, and back in November 2017, for example, it was 13.16%.
Keep in mind, however, that the interest rate for your credit card could be higher or lower than this average depending on factors such as your credit profile, given how credit cards work. So what’s a good annual percentage rate (APR) for you may be different from what a good APR for a credit card is for someone else, as you’ll learn in more detail below.
Interest Rates by Credit Quality Types
Credit card interest rates, or the APR on a credit card, tend to vary depending on an applicant’s credit score. The average interest rate for credit cards tends to increase for those who have lower credit scores, according to the CFPB’s most recent Consumer Credit Card Market Report.
The report measures what’s called an effective interest rate — meaning, the total interest charged to a cardholder at the end of the billing cycle.
Credit Quality
Effective Interest Rate
Deep subprime (a score of 579 or lower)
23%
Subprime (a score of 580-619)
22%
Near prime (a score of 620-659)
20%
Prime (a score of 660-719)
18%
Prime plus (a score of 720-799)
15%
Super prime (800-850)
9%
What this table shows is that the lower your credit score, the more you will be paying in interest on balances you have on your credit cards (meaning, any amount that remains after you make your credit card minimum payment).
Keep in mind that these rates don’t include any fees that may also apply, such as those for balance transfers or late payments, which can further increase the cost of borrowing.
Recommended: Revolving Credit vs. Line of Credit, Explained
Interest Rates by Credit Card Types
Interest rates may vary depending on the type of credit card you carry. In general, platinum or premium credits have a higher APR — cards with higher interest rates tend to come with better features and benefits.
Type
APR Range
No annual fee credit card
20.64% – 27.65%
Cash back credit card
21.06% – 27.78%
Rewards credit card
20.91% – 28.15%
Prime Rate Trend
The prime rate is the interest rate that financial institutions use to set rates for various types of loans, such as credit cards. Most consumer products use the prime rate to determine whether to raise, decrease, or maintain the current interest rate. That’s why for credit cards, you’ll see the rates are variable, meaning they can change depending on the prime rate.
As of March 6, 2024, the prime rate is 8.50%. On March 17, 2022, the prime rate was 3.50%. This can be considered an example of how variable this rate can be.
Delinquency Rate Trend
Credit card delinquency rates apply to accounts that have outstanding payments or are at least 90 days late in making payments. These rates have fluctuated based on various economic conditions. In many cases, rates are higher in times of financial duress, such as during the financial crisis in 2009, when it was at 6.61%.
As economic conditions rebound or the economy builds itself up, delinquency rates tend to go down, as consumers can afford to make on-time payments. According to the Federal Reserve, the delinquency rate for the fourth quarter in 2023 was 3.20%, up from 2.34% a year earlier and 1.63% for the same time period in 2021. This may be due to the pandemic, when consumers were more wary of discretionary spending or from negotiating payment plans with creditors.
Credit Card Debt Trend
Credit card debt has risen from its previous levels of $926 billion in 2019 and $825 billion at the end of 2020. It has climbed to $1.129 trillion for the fourth quarter of 2023, a new high.
This shows an ongoing surge in credit card debt, and these statistics can make individual cardholders think twice about their own balance and how to lower it.
Recommended: How Does Credit Card Debt Forgiveness Work?
Types of Credit Card Interest Rates
Credit cards have more than one type of interest rate. The credit card interest rate that applies may differ depending on how you use your card.
Purchase APR
The purchase APR is the interest rate that’s applied to balances from purchases made anywhere that accepts credit card payments. For instance, if you purchase a pair of sneakers using your credit card, you’ll be charged the purchase APR if you carry a balance after the statement due date.
Balance Transfer APR
A balance transfer APR is the interest rate you’ll be charged if you move a balance from one credit card to another. Many issuers offer a low introductory balance transfer APR for a predetermined amount of time.
Penalty APR
A penalty APR can kick in if you’re late on your credit card payment. This rate is usually higher than the purchase APR and can be applied toward future purchases as long as your account remains delinquent. This is why it’s always critical to make your credit card payment, even if you’re in the midst of requesting a credit card chargeback, for instance.
Cash Advance APR
A cash advance has its own separate APR that gets triggered when you use your card at an ATM or bank to withdraw cash, or if you use a convenience check from the issuer. The APR tends to be higher than the purchase APR.
Introductory APR
An introductory APR is an APR that’s lower than the purchase APR and that applies for a set amount of time. Introductory APRs may apply to purchases, balance transfers, or both.
For instance, you may get a 0% introductory APR for purchases you make for the first 18 months of account opening. After that, your APR will revert to the standard APR. (Note that the end of the introductory APR is completely unrelated to your credit card expiration date.)
Factors That Affect Interest Rate
When you apply for a credit card, you may notice that your interest rate is different from what was advertised by the issuer. That’s because there are several factors that affect your interest rate, which can make it higher or lower than the average credit card interest rate.
Credit Score
Your credit score determines how risky of a borrower you are, so your interest rate could reflect your creditworthiness. Lenders tend to charge higher interest rates for those who have lower scores. Your credit score can also influence whether your credit limit is above or below the average credit card limit.
Credit Card Type
The type of credit card may affect how much you could pay in interest. Different types of credit cards include:
• Travel rewards credit cards
• Student credit cards
• Cash-back rewards credit cards
• Balance transfer cards
Most likely, the more features you get, the higher the interest rate could be. Student credit cards may have lower interest rates, but that may not always be the case. That’s why it’s best to check the APR range of credit cards you’re interested in before submitting an application.
The Takeaway
The current average credit card interest rate is 21.47%, according to data from the Federal Reserve. However, your rate could be higher or lower than the average APR for credit cards based on factors such as your creditworthiness and the type of card you’re applying for. Your best bet is to pay off your entire balance each month on your credit card so you don’t have to worry about how high the interest rate for a credit card may be. That way, you can focus on features you’re interested in.
With whichever credit card you may choose, it’s important to understand its features and rates and use it responsibly.
Whether you’re looking to build credit, apply for a new credit card, or save money with the cards you have, it’s important to understand the options that are best for you. Learn more about credit cards by exploring this credit card guide.
FAQ
What is the average credit card interest rate?
The average interest rate for credit cards is 21.47%, according to the latest data from the Federal Reserve for the fourth quarter of 2023.
How do you get a low credit card interest rate?
You may be able to get a low credit card interest rate by building your credit score, as this will encourage lenders to view you as less risky. Otherwise, you can also aim to get a credit card with a low introductory rate, though these offers are generally reserved for those with good credit. Even if the APR is temporary, it could be beneficial depending on your financial goals.
What is a bad APR rate?
A bad APR is generally one that is well above the average credit card interest rate. However, what’s a good or bad APR for you will depend on your credit score as well as what type of card you’re applying for.
Photo credit: iStock/MicroStockHub
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.
First-time home buyers worrying about housing affordability face two obstacles: high home prices and high mortgage rates.
Home prices have continued to rise in over 85% of U.S. cities, and according to a recent Redfin report, a homebuyer must earn $115,000 to afford a typical home, which is $40,000 more than the average American household earns.
One way for this gap to correct is for mortgage rates to go down, but this is something that Bank of America Corp. (NYSE:BAC) CEO Brian Moynihan does not foresee anytime soon.
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Compared to historical mortgage rates today’s rates might not be so bad, Moynihan said. People likely will get used to mortgage rates of 6% to 7%, given that mortgage rates were over 18% in the 1980s during the Federal Reserve’s inflation-fighting efforts, he told CNBC.
Given this backdrop, Moynihan argues that today’s mortgage rates are more normal than during the unorthodox rate policy in the 15 years after the Great Financial Crisis, saying, “For 15 years, we had no real rate structure, you know, rate structure in the United States and around the world.”
For consumers hoping to catch a break with lower mortgage rates, Goldman Sachs signals caution as well.
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It extended its first expected rate cut past the Fed’s May meeting after Federal Reserve policymakers have pushed back on the market’s expectation of rate cuts this year, citing a need to see more consistent evidence of inflation stabilizing around the 2% target.
However, lower mortgage rates influenced by future Fed cuts aren’t the only way buyers can hope for a lower rate.
U.S. consumers have been able to afford homes by purchasing newly built houses from home builders that have been willing to buy down buyers’ mortgage rates to allow them to afford them. Homebuilders cannot wait for the Fed to lower rates to continue their business in the same way an individual homebuyer might be more willing to wait.
About 75% of homebuilders are offering mortgage rates lower than a homebuyer could get from a traditional financial institution, according to John Burns Research & Consulting. Whether the trend of homebuilders aggressively buying down mortgage rates to encourage home sales is set to continue is up for debate, but one big investor has shaken up his portfolio regarding homebuilder stocks.
Warren Buffett’s Berkshire Hathaway Inc. has recently been optimistic about the prospects of U.S. homebuilders, disclosing its stake in three major companies in the second quarter of 2023: D.R. Horton Inc. (NYSE:DHI), NVR Inc. (NYSE:NVR) and Lennar Corp. (NYSE:LEN).
However, Buffett switched course quickly on D.R. Horton, which was once his largest homebuilder stock. In the fourth quarter last year, Berkshire Hathaway announced it sold out of D.R. Horton while keeping both NVR and Lennar.
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This article 7% Mortgage Rates Are Here To Stay, Bank of America’s CEO Warns As Warren Buffett Sells Out Of This Homebuilder Stock originally appeared on Benzinga.com
The information provided on this website does not, and is not intended to, act as legal, financial or credit advice. See Lexington Law’s editorial disclosure for more information.
The average student loan debt is $37,557.60 per borrower, though the exact amount varies significantly from person to person.
Conversations around student loan debt forgiveness have called to attention a staggering statistic: in the middle of 2023, Americans held a collective $1.63 trillion in federal student loans spread amongst more than 43 million borrowers.
The average student loan debt is $37,557.60 per borrower, though the exact amount varies significantly from person to person depending on age, gender and education level, among other characteristics.
The following chart captures the staggering rise of average student loan debt since 2007 by displaying the average debt, total debt and total number of borrowers and how they have changed over time.
Average student loan debt over time
Year
Average debt
Total debt
Borrowers
2007
$18,233.22
$516 billion
28.3 million
2008
$19,297.66
$577 billion
29.9 million
2009
$20,467.29
$657 billion
32.1 million
2010
$21,865.89
$750 billion
34.3 million
2011
$23,232.88
$848 billion
36.5 million
2012
$24,751.96
$948 billion
38.3 million
2013
$26,262.63
$1.04 trillion
39.6 million
2014
$27,764.13
$1.13 trillion
40.7 million
2015
$29,086.54
$1.21 trillion
41.6 million
2016
$30,732.86
$1.30 trillion
42.3 million
2017
$32,159.62
$1.37 trillion
42.6 million
2018
$33,566.43
$1.44 trillion
42.9 million
2019
$35,198.14
$1.51 trillion
42.9 million
2020
$36,596.74
$1.57 trillion
42.9 million
2021
$37,096.77
$1.61 trillion
43.4 million
2022
$37,471.26
$1.63 trillion
43.5 million
2023
$37,557.60
$1.63 trillion
43.4 million
Source: U.S. Department of Education
After accounting for inflation, the average student loan debt has increased by more than 50 percent since 2007. According to the Pew Research Center, the median purchasing power of Americans has hardly risen in the past four decades, so it stands to reason that student loan debt is an ever-increasing source of financial burden.
Student loan debt has ballooned over the past 15 years. At the beginning of 2007, just 28 million borrowers held around $500 billion in student loan debt—or an average of $18,233 per borrower. In 2023, the number of borrowers increased to about 43 million, who collectively hold more than $1.6 trillion in debt, which amounts to an average of $37,557.60 per person.
Although average student loan debt is more than $37,000, this figure is somewhat skewed since some students have extraordinarily large sums of debt that raise the overall average. The greatest number of borrowers owe just $10,000 to $20,000 in student loans, but more than 3 million are over $100,000 in debt from federal student loans.
Using the most recent available data from the U.S. Department of Education, we’ve compiled detailed statistics about the average student loan debt for Americans. Read on to see more, or use the links below to jump to a specific section.
Average student loan debt:
Average student loan debt by state
While student loan debt is a national concern, the effects are felt differently in various states across the country. Many states have average student loan debt that hovers around the $37,645 national average, but there are several notable outliers. North Dakota, for instance, has the lowest average student loan debt at $30,000, while Maryland has the highest average student loan debt at $43,115.
Though they are not technically states, the District of Columbia has a very high average student loan debt of $54,347, and the U.S. territory of Puerto Rico has a relatively low average student loan debt of $29,577.
Here’s a list of U.S. states along with their average student loan debt, total student loan debt and total borrowers using data as of June 30, 2023.
Average student loan debt by state
State
Average debt
Total debt
Borrowers
Alabama
$37,265.17
$24.2 billion
649,400
Alaska
$34,493.45
$2.4 billion
68,700
Arizona
$35,543.01
$32.5 billion
917,300
Arkansas
$33,508.38
$13.4 billion
399,900
California
$37,343.36
$149 billion
3.99 million
Colorado
$36,939.31
$29.4 billion
795,900
Connecticut
$36,055.35
$18.5 billion
513,100
Delaware
$38,173.65
$5.1 billion
133,600
District of Columbia
$54,347.83
$6.5 billion
119,600
Florida
$39,037.04
$105.4 billion
2.7 million
Georgia
$41,529.41
$70.6 billion
1.7 million
Hawaii
$37,995.15
$4.7 billion
123,700
Idaho
$33,139.27
$7.4 billion
223,300
Illinois
$39,437.50
$63.1 billion
1.6 million
Indiana
$33,105.92
$30.3 billion
918,300
Iowa
$30,758.71
$13.5 billion
438,900
Kansas
$33,127.89
$12.9 billion
389,400
Kentucky
$33,110.42
$20.3 billion
613,100
Louisiana
$34,777.39
$23.2 billion
667,100
Maine
$33,854.42
$6.5 billion
192,000
Maryland
$43,115.60
$36.7 billion
851,200
Massachusetts
$34,922.69
$32.3 billion
924,900
Michigan
$36,928.57
$51.7 billion
1.4 million
Minnesota
$33,953.31
$27.2 billion
801,100
Mississippi
$36,904.50
$16.5 billion
447,100
Missouri
$35,536.60
$30 billion
844,200
Montana
$33,690.66
$4.4 billion
130,600
Nebraska
$32,449.54
$8.2 billion
252,700
Nevada
$33,996.68
$12.3 billion
361,800
New Hampshire
$34,341.36
$6.7 billion
195,100
New Jersey
$35,416.67
$44.9 billion
1.2 million
New Mexico
$34,022.39
$7.9 billion
232,200
New York
$37,960.00
$94.9 billion
2.5 million
North Carolina
$36,857.14
$51.6 billion
1.4 million
North Dakota
$30,000.00
$2.7 billion
90,000
Ohio
$35,000.00
$63 billion
1.8 million
Oklahoma
$31,874.88
$16.1 billion
505,100
Oregon
$37,415.59
$20.5 billion
547,900
Pennsylvania
$35,000.00
$66.5 billion
1.9 million
Puerto Rico
$29,577.05
$10 billion
338,100
Rhode Island
$32,885.91
$4.9 billion
149,000
South Carolina
$38,360.14
$29.1 billion
758,600
South Dakota
$31,746.03
$3.8 billion
119,700
Tennessee
$36,557.93
$32.5 billion
889,000
Texas
$33,447.37
$127.1 billion
3.8 million
Utah
$33,125.00
$10.6 billion
320,000
Vermont
$38,071.07
$3 billion
78,800
Virginia
$39,818.18
$43.8 billion
1.1 million
Washington
$36,176.03
$29.1 billion
804,400
West Virginia
$32,159.93
$7.4 billion
230,100
Wisconsin
$32,231.85
$23.8 billion
738,400
Wyoming
$30,357.14
$1.7 billion
56,000
Source: U.S. Department of Education
Total student loan debt for each state correlates strongly with population, so California ($149 billion), Texas ($127.1 billion) and New York ($94.9 billion) have the largest amount of debt among all states. The smallest amount of debt belongs to Wyoming, which holds just $1.7 billion among 56,000 borrowers—though that is nearly 10 percent of the state’s population with some sort of student loan debt.
Average student loan debt by age
Student loan debt varies significantly by age, with those ages 50 to 61 holding the highest average debt at $45,584.62. On the other hand, the greatest number of borrowers are ages 25 to 34 (14.9 million total borrowers), and the greatest amount of debt is held by those ages 35 to 49 ($613 billion total debt). Those 62 or older represent less than 6 percent of total borrowers who hold just $92 billion—less than any other age group.
The following chart shows the average student loan debt, total student loan debt and number of borrowers for each major age group.
Average student loan debt by age
Age
Average debt
Total debt
Borrowers
24 and younger
$14,383.35
$97.8 billion
6.8 million
25 to 34
$32,801.32
$495.3 billion
15.1 million
35 to 49
$43,000.00
$632.1 billion
14.7 million
50 to 61
$45,584.62
$296.3 billion
6.5 million
62 and older
$42,518.52
$114.8 billion
2.7 million
Source: U.S. Department of Education
The average debt for each age group is skewed slightly upward by a small number of people who hold a significant amount of student loan debt—in some cases $200,000 or more. Across borrowers ages 25 to 61, it is most common to have between $20,000 and $40,000 of student loan debt, whereas those under 25 generally have between $10,000 and $20,000. Most borrowers above age 62 have less than $5,000 in debt.
Across all age groups, a total of 11.7 million borrowers owe more than $40,000 in student loan debt—meaning around 25 percent of total borrowers have more debt than average.
Average student loan debt by race and gender
Student loan debt is not distributed equally among races and genders, as borrowing patterns tend to vary substantially. While Asian students tend to borrow the least amount of money to fund their education, Black students tend to borrow the most. In general, a smaller percentage of white students (67 percent) and Asian students (43 percent) took out loans for their education than Hispanic students (70 percent) and Black students (86 percent).
Here is a full look at how students of different races and genders funded their education using student loans.
Average student loan amount borrowed by race and gender
Race or ethnicity
Gender
Average borrowed
White
Male
$29,862
Female
$31,346
Black or African American
Male
$35,665
Female
$37,558
Hispanic or Latino
Male
$27,452
Female
$27,029
Asian
Male
$25,507
Female
$25,252
Source: American Association of University Women
Many women take loans out for four-year for-profit universities, which tend to charge higher tuition, leading to larger student loan burdens after graduation. The American Association of University Women found that women hold nearly two-thirds of student loan debt, and many women manage debt payments while also managing housing, food or childcare costs on an average post-graduation salary of about $35,000.
Among Black women, 57 percent of college graduates report difficulty repaying student loans despite earning a bachelor’s degree or higher. A 2022 study by The Education Trust also found that 12 years after enrolling in college, Black women find themselves owing 13 percent more than the amount they initially borrowed, whereas White men have managed to reduce their debt by 44 percent in the same time frame.
Average student loan debt by repayment status
The average student loan debt varies according to repayment status, as student loans are treated differently for students in school, throughout the post-graduation grace period, amid repayment or during deferment, forbearance or default. For students in school and during the post-graduation grace period, no payments are required—though interest may continue to accrue for unsubsidized loans. Deferment and forbearance are similar, though no interest accrues with deferment as it typically does with forbearance.
The following chart shows the average student loan debt for those with different repayment statuses. Keep in mind that the below chart is based on data from Q3 2023. Prior to that, in March 2020, many major shifts occurred in loan statuses due to the Coronavirus Aid, Relief, and Economic Security (CARES) Act.
The following chart shows the average student loan debt for those with different repayment statuses.
Average student loan debt by repayment status
Status
Average debt
Total debt
Borrowers
In school
$17,903.85
$93.1 billion
5.2 million
Grace
$23,923.08
$31.1 billion
1.3 million
Repayment
$33,000.00
$9.9 billion
300,000
Deferment
$36,571.43
$102.4 billion
2.8 million
Forbearance
$40,260.07
$1,099.1 trillion
27.3 million
Default
$21,844.44
$98.3 billion
4.5 million
Source: U.S. Department of Education
While temporary government action has offered reprieve to millions of student loan borrowers, a looming financial crisis still threatens as high-interest loans prevent many people from accumulating wealth, purchasing homes or starting families.
Total student loan debt has tripled over the past 15 years—and in that time, it has passed both auto loans and credit card debt for the greatest share of non-housing debt in the United States, according to data from the Federal Reserve Bank.
With student loan debt on the rise, many people were struggling to make payments before the CARES Act. Now that payments have restarted as of October 2023, you’ll want to make sure you’re making payments on time. Student loan debt and payments can have an impact on your credit, so getting a handle on that debt is crucial.
If you need help with cleaning up your credit report or getting your credit back on track, our services at Lexington Law Firm could help. The combination of debt from student loans, credit cards, mortgages and auto loans can be overwhelming and make it hard to maintain good credit, but professional support can provide the boost you need to overcome these temporary obstacles.
Note: Articles have only been reviewed by the indicated attorney, not written by them. The information provided on this website does not, and is not intended to, act as legal, financial or credit advice; instead, it is for general informational purposes only. Use of, and access to, this website or any of the links or resources contained within the site do not create an attorney-client or fiduciary relationship between the reader, user, or browser and website owner, authors, reviewers, contributors, contributing firms, or their respective agents or employers.
Reviewed By
Alexis Peacock
Supervising Attorney
Alexis Peacock was born in Santa Cruz, California and raised in Scottsdale, Arizona.
In 2013, she earned her Bachelor of Science in Criminal Justice and Criminology, graduating cum laude from Arizona State University. Ms. Peacock received her Juris Doctor from Arizona Summit Law School and graduated in 2016. Prior to joining Lexington Law Firm, Ms. Peacock worked in Criminal Defense as both a paralegal and practicing attorney. Ms. Peacock represented clients in criminal matters varying from minor traffic infractions to serious felony cases. Alexis is licensed to practice law in Arizona. She is located in the Phoenix office.
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Homebuyer demand for mortgages fell for the second week in a row last week as firming rates put a damper on the surge in mortgage applications seen in January, a weekly survey of lenders by the Mortgage Bankers Association (MBA) shows.
The MBA’s Weekly Mortgage Applications Survey showed applications for purchase loans fell by a seasonally adjusted 1 percent last week when compared to the week before and were down 19 percent from a year ago. Requests to refinance were up 12 percent week over week but only 1 percent from a year ago.
Joel Kan
“Mortgage rates have stayed close to where they started the year, despite swings in Treasury yields because of slowing inflation offset by stronger than expected readings on the job market,” MBA Deputy Chief Economist Joel Kan said in a statement.
Mortgage rates no longer falling
At 6.68 percent Tuesday, rates on 30-year fixed-rate conforming mortgages were up 12 basis points from a recent low of 6.56 percent registered on Dec. 27, according to loan lock data collected by Optimal Blue.
That’s still a 1.15 percentage point drop from last year’s peak of 7.83 percent, seen on Oct. 25. However, a record number of Americans polled by Fannie Mae in January — many of whom have been priced out of markets where listings remain scarce — said they’re expecting mortgage rates to come down even more in the year ahead.
“Rates at these levels have not prompted much of a reaction in the refinance market, as most homeowners have mortgages with much lower rates,” Kan said. “Purchase activity has been strong to start 2024 compared to the final quarter of 2023. However, activity is still weaker than a year ago because of low housing supply.”
Applications for purchase mortgages picked up during the first three weeks of January after rates pulled back from 2023 highs. But with mortgage rates now slightly higher than they were at the end of the year, the MBA’s surveys show demand for purchase loans contracting during the weeks ending Jan. 26 and Feb. 2.
Bond market investors’ bets that the Federal Reserve would begin cutting rates in March had been helping bring rates down. But at the central bank’s first meeting of the year, Fed Chairman Jerome Powell warned that a March rate cut was unlikely, and Fed policymakers indicated they intend to continue “quantitative tightening” that’s trimmed $1.3 trillion from the Fed’s balance sheet.
A blowout jobs report released Feb. 2 seemed to validate the Fed’s cautious approach to fighting inflation, showing U.S. businesses and government agencies added close to twice as many jobs as expected in January.
(A survey by the National Federation of Independent Business (NFIB) that’s considered to be a leading indicator of future employment trends points to slower job growth in the second quarter of this year, economists at Pantheon Macroeconomics said Tuesday in a note to clients.)
In an interview with the CBS News program 60 Minutes that aired Sunday, Powell reiterated that while almost all 19 members of the Federal Open Market Committee expect to cut rates this year, the first cut isn’t likely to come until the middle of the year.
Inflation “has been falling steadily for 11 months,” 60 Minutes reporter Scott Pelley pointed out to Powell. “You’ve avoided a recession. Why not cut the rates now?”
Powell said that with the economy still on strong footing, “we feel like we can approach the question of when to begin to reduce interest rates carefully.”
The Fed wants to see “more evidence that inflation is moving sustainably down to 2 percent,” Powell said. “We have some confidence in that. Our confidence is rising. We just want some more confidence before we take that very important step of beginning to cut interest rates.”
At 7.29 percent, rates on jumbo mortgages that exceed Fannie Mae and Freddie Mac’s $766,550 conforming loan limit are up 73 basis points from a recent low of 6.56 percent registered by Optimal Blue on Dec. 29.
The growing “spread” between conforming and jumbo mortgage rates coincides with renewed worries that falling commercial real estate values could lead to problems for regional banks that have traditionally been a leading provider of jumbo loans.
Asked by 60 Minutes about the likelihood of real estate sparking a banking crisis on the magnitude of the 2008 financial crisis, Powell said he doesn’t think that’s likely.
“We’ve looked at the larger banks’ balance sheets, and it appears to be a manageable problem,” Powell said. “There are some smaller and regional banks that have concentrated exposures in these areas that are challenged. And, you know, we’re working with them.”
While he doesn’t see a repeat of the 2008 financial crisis, Powell does expect “there will be some banks that have to be closed or merged out of existence because of this. That’ll be smaller banks, I suspect, for the most part.”
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