The four-day business week accompanying the Memorial Day Holiday contributed to a further slowdown in mortgage applications. The Mortgage Bankers Association (MBA) said its Market Composite Index, a measure of application volume, decreased 1.4 percent on a seasonally adjusted basis and dropped 12 percent on an unadjusted basis.
The Refinance Index decreased 1.0 percent from the previous week and was 42.0 percent lower than the same week one year ago. The refinance share of mortgage activity increased to 27.3 percent from 26.7 percent the previous week.
The seasonally adjusted Purchase Index dipped 2.0 percent. The unadjusted index was down 13.0 percent week-over-week and 27 percent on an annual basis.
“Mortgage rates declined last week from a recent high, but total application activity slipped for the fourth straight week,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “The 30-year fixed rate dipped to 6.81 percent; 10 basis points lower than last week but still the second highest rate of 2023 to date.
“Overall applications were more than 30 percent lower than a year ago, as borrowers continue to grapple with the higher rate environment. Purchase activity is constrained by reduced purchasing power from higher rates and the ongoing lack of for-sale inventory in the market, while there continues to be very little rate incentive for refinance borrowers. There was less of a decline in government purchase applications last week, which was consistent with a growing share of first-time home buyers in the market.”
Highlights from MBA’s Weekly Mortgage Applications Survey
Loan sizes dropped by about $10,000 last week. The overall loan size was $381,200 with purchase loans averaging $429,700.
The FHA share of total applications increased to 13.2 percent from 12.7 percent and the VA share increased to 12.5 percent from 12.1 percent. USDA loan applications accounted for 0.4 percent of the total.
The 6.91 percent average rate for conforming 30-year fixed-rate mortgages (FMR) was accompanied by a point drop from 0.83 to 0.66.
Jumbo 30-year FRM had an average rate of 6.74 percent compared to 6.78 percent the prior week. Points fell to 0.56 from 0.76.
Thirty-year FRM with FHA guarantees declined from 6.85 percent,with 1.26 points to 6.73 percent with 1.15 points.
The rate for 15-year fixed-rate mortgages decreased to 6.25 percent from 6.41 percent, with points decreasing to 0.62 from 0.84.
The average contract interest rate for 5/1 adjustable-rate mortgages (ARMs) increased to 5.93 percent from 5.39 percent,with points increasing to 0.96 from 0.46.
The ARM share of activity was unchanged at 6.8 percent.
What is the best Alaska cruise for couples? If I could only do one Alaska voyage with my spouse, I know which one I would pick: A seven-night sailing out of Juneau on one of UnCruise Adventures’ small ships.
I love the adventure focus of these tiny, no-frills ships, which hold fewer than 100 people and focus on getting travelers into remote parts of Southeast Alaska for hiking, kayaking, whale watching and other outdoorsy pursuits.
That said, an Alaska cruise with UnCruise (so named because its cruises are designed to not be like a typical cruise) isn’t for everyone.
For more cruise guides, news and tips, sign up for TPG’s cruise newsletter.
If your idea of the perfect couples cruise to Alaska is being pampered at every turn (and you’re not worried about your budget), you might want to sign up instead for a sailing with an ultra-luxury line such as Silversea Cruises, Seabourn or Regent Seven Seas Cruises.
If you’re looking for an Alaska cruise for couples that won’t break the bank, I’d probably steer you to one of the Holland America ships sailing north to Alaska out of Seattle.
In short, there’s no one answer to the question of what’s the best Alaska cruise for couples. Many cruise ships and itineraries could fit the bill, depending on your vacation preferences.
Here we list our top picks for the best Alaska cruises for couples.
An off-the-beaten-path Alaska adventure with UnCruise
You’ve probably never heard of UnCruise Adventures. It’s such a tiny brand that all the customers who sail the line in a year probably wouldn’t fill a single giant Royal Caribbean ship. But if you’re a couple looking to get off the beaten path in Alaska for adventure, it’s the ship-based travel company you want to get to know.
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Specializing in Alaska trips, UnCruise operates a fleet of super-tiny vessels — the biggest carries just 86 people — that are so small they can go to remote, outdoorsy parts of Southeast Alaska that no big ship could visit. We’re talking tiny bays surrounded by miles of forests where you’ll be the only ones around. Or a tiny native settlement that is home to just hundreds of people.
The main focus of UnCruise sailings in Alaska is the Great Outdoors. The company is known for trips into wilderness areas of Southeast Alaska, where passengers can enjoy hiking, kayaking and wildlife-watching. You’ll go days without seeing anyone else but the handful of people on your vessel.
On an UnCruise Adventures trip, the vessel serves as a floating adventure platform that can get you into the most remote areas in a small-group setting. The vessels carry skiffs for exploring and landings, kayaks, paddleboards and other adventure toys.
Related: The 18 best small cruise vessels sailing the world
Just don’t expect anything too fancy. UnCruise vessels are comfortable but no-frills. Many were built decades ago when cruise vessels were more spartan. On most of the vessels, you’ll find a single casual dining area, a lounge that doubles as a bar and basic cabins. That’s it. What you’re paying for is where the ship can get you and the adventure of it all.
By their very nature, these are trips that mostly cater to couples. In fact, because of the adventure focus of the daily activities, the line restricts children on board to those at least 8 years old. The small vessels also do not have any family-focused attractions on board like you’d find on bigger cruise ships.
Note that UnCruise Adventures’ nine small vessels break down roughly into two categories. Ships with Wilderness in their names are more no-frills and described as expedition vessels; those with Safari in their names are higher-end and touted as boutique yachts. My favorites are the Wilderness vessels, which are less pricey, on average. But to each his own.
A luxury Alaska trip with Silversea Cruises
Couples who want the ultimate in pampering when exploring The Last Frontier — and for whom money is no object — might want to look at an Alaska cruise on one of several ultra-luxury ships that sail regularly to Alaska. They cater mostly to older couples and solo travelers and draw relatively few families, though you do sometimes find some children on board.
Silversea Cruises is the leader in this market, with two ships sailing to Alaska in any given year. For the 2023 season, the line is sending one of its newer ships, the 596-passenger Silver Muse and the older, 382-passenger Silver Whisper to Alaska. But in 2024, it’ll swap in its newest, snazziest vessel, the 728-passenger Silver Nova, for Silver Whisper. That’ll give it the most modern fleet of luxury ships in the state.
Other ultra-luxury lines that operate in Alaska are Regent Seven Seas Cruises, Seabourn and Scenic Luxury Cruises, each of which sends one vessel to the state for all or at least part of the summer season.
Related: The 8 best luxury cruise lines for elegance and exclusivity
What all three of the Silversea ships that will sail in Alaska over the next two years have in common is that they offer large, elegant and supremely comfortable suites (and every cabin is a suite on these ships); pampering service (that fancy suite comes with its very own butler); and gourmet cuisine of the sort you find at the finer restaurants in big cities.
Among the standout dining options on board is the modern French eatery La Dame, which offers a Michelin star-style evening that showcases ingredients like France’s sublime Limousin beef, presented with a flourish. The Atlantide restaurant offers such delicacies as caviar and lobster presented beautifully and at no extra cost.
Or if you want to have caviar in bed, your butler will only be too happy to arrange it — and will deliver it with white gloves and in full tuxedo tails.
In short, think of these ships as floating Four Seasons or Ritz-Carlton hotels. They offer those sorts of lodging experiences with the pricing to match.
A low-cost sailing from Seattle with Holland America
Looking for the best cruises to Alaska for couples on a budget? My picks are the seven-night sailings to the state that Holland America offers out of Seattle.
Often, the lowest starting prices for any cruise to Alaska are these sailings, both on an absolute and per-day basis.
For the 2023 season, for instance, many Holland America sailings to Alaska from Seattle are available for under $750 per person for seven nights, as of this guide’s posting. I even found some as low as $429 per person for a weeklong cruise.
That’s even lower than the typical starting prices for Alaska voyages offered by Carnival Cruise Line, which is the low-cost leader for sailings out of most U.S. ports. When I was pricing voyages for this story, I found few Carnival sailings available for under $750 per person, with most Carnival sailings starting around $800 per person or more for seven nights.
Related: The ultimate Alaska cruise guide
With a history in Alaska that goes back more than 70 years, Holland America is one of the longtime leaders in cruises to the state (along with its sister brand, Princess Cruises), and its target market is couples (skewing to the older side, with lots of retirees) rather than families.
Holland America bases two ships in Seattle for cruises to Alaska: the 2,104-passenger Eurodam and 1,964-passenger Westerdam.
A land-and-sea hybrid trip with Princess Cruises
If you’re a couple looking to see more of Alaska than its coastal areas, a hybrid trip combining a cruise with a multi-day land tour to inland areas is your best bet. These “cruisetours” are a specialty of Princess Cruises, as well as its sister company Holland America.
Princess has particularly robust offerings when it comes to such trips because it operates five wilderness resorts in Alaska that it incorporates into its itineraries. The resorts are spread across such iconic inland destinations as Denali National Park and the Kenai Peninsula.
Princess also has its own fleet of buses and rail cars to take you from its ships to its resorts, with all such transportation included in its packages.
The line sells 24 cruisetour itineraries that add three to 10 nights of land touring to a seven-night cruise. The options include Denali National Park-focused “Denali Explorer” routings that include a seven-night cruise; a scenic train ride to Denali National Park; two to four nights at a Princess lodge at Denali National Park; and an additional one or two nights in Anchorage or Fairbanks, Alaska, or both. These trips range from 10 to 13 nights in total.
In addition, Princess offers longer and more far-ranging “Off the Beaten Path” routings that add nights at the remote Copper River Princess Lodge in eastern Alaska near Wrangell-St. Elias National Park or the Kenai Princess Wilderness Lodge on the Kenai Peninsula. These trips range from 13 to 15 nights in total.
Even longer “Connoisseur” cruisetours combine stays at up to five Princess lodges in multiple locations around the state and last up to 17 nights.
Related: The coolest things to do on an Alaska cruise
All cruisetours are offered in conjunction with one-way voyages between Vancouver, British Columbia, and Alaska — something that Princess offers in abundance each summer during the short Alaska cruise season.
Many of the ships that sail on such itineraries have permission to visit Glacier Bay National Park, a highlight of any Alaska trip. Princess takes more guests to Glacier Bay National Park than any other cruise line, as 74% of all its itineraries include a visit to the park.
A more in-depth Alaska escape with Viking
For couples looking for a more in-depth exploration of Alaska’s coastal areas than most lines offer, Viking may be the perfect choice. A relative newcomer to Alaska sailings, the upscale cruise brand operates longer Alaska sailings than is the norm, with every one of its Alaska departures lasting at least 10 nights.
The longer sailings allow for calls in a broader mix of coastal Alaska towns than you’ll find on the seven-night itineraries that are more typical for cruises to Alaska. In addition to stops at classic Southeast Alaska cruise destinations such as Juneau, Skagway and Ketchikan, Viking’s 10-night Alaska itineraries include a visit to Valdez, Alaska — a less touristy coastal town known for its fishing boat fleet that’s home to fewer than 4,000 people — and a cruise into little-visited Yakutat Bay.
Most Viking sailings to Alaska also begin or end with an overnight call in Anchorage, which is too far north for ships on seven-night Alaska itineraries from Seattle and Vancouver to reach. Passengers can visit attractions in and around the city that they couldn’t see on the sailings offered by almost every other line.
Viking, notably, offers included-in-the-fare tours in every one of these ports, allowing every passenger on board to get a guided experience during stops without paying extra. (Generally, Viking voyages are highly inclusive, keeping with its “no nickel-and-diming” philosophy.)
Related: The 5 best destinations you can visit on a Viking cruise
On board, Viking’s programming revolves heavily around what the line calls “cultural enrichment” — lectures by experts on topics related to the places its ships visit (in this case, Alaska), as well as cultural and culinary offerings that often have a local tie-in.
Indeed, Viking is known for catering specifically to a certain type of thoughtful, inquisitive, generally older traveler who is as interested in learning while on vacation as being pampered. Agewise, its sweet spot is travelers (mostly couples) who range from 55 to 75 years in age. So, if you’re on the younger side, this might not be the perfect couples cruise for you.
What Viking ships don’t offer is a lot of onboard amusements aimed at families and younger travelers. In fact, the line doesn’t even allow children under the age of 18 on its ships. It’s one of the only major cruise brands in the world with such a rule. That makes it by definition a cruise line for couples as well as some solo travelers.
For 2023 and 2024, Viking will base one ship in Alaska during the summer (the 930-passenger Viking Orion), but it’ll expand in 2025 with a second vessel (the 930-passenger Viking Sea). In addition to 10-night sailings to Alaska, the ships occasionally offer longer, 22-night sailings that extend beyond Alaska all the way to Japan.
Bottom line
More than a dozen major cruise lines operate Alaska cruises during the spring, summer and fall, giving couples wanting to explore the state on a cruise a wide range of choices.
What is the best Alaska cruise for couples? There is no one right answer. It’s defined by your personal interests and travel style, with the best Alaska cruise for you and your companion depending on how much adventure you prefer on a vacation, how much luxury you require, your budget and more.
Let’s take a look at the top mortgage lenders in Idaho, based on annual loan origination volume.
The Gem State was one of the hotter housing markets last year, seeing an influx of buyers from other states nationwide.
That, plus rising home prices, led to over $42 billion in home loan origination volume there last year.
And while some 500+ mortgage companies took part, only one could claim the top spot.
Interestingly, the #1 mortgage lender in Idaho is homegrown. Read on to find out who it is.
Top Mortgage Lenders in Idaho (Overall)
Ranking
Company Name
2021 Loan Volume
1.
Idaho Central CU
$4.2 billion
2.
Rocket Mortgage
$2.4 billion
3.
U.S. Bank
$1.3 billion
4.
Fairway Independent
$1.2 billion
5.
UWM
$1.1 billion
6.
Wells Fargo
$1.1 billion
7.
Academy Mortgage
$1.0 billion
8.
Guild Mortgage
$911 million
9.
Glacier Bank
$843 million
10.
Willamette Valley Bank
$834 million
Even if you’re headquartered in a particular state, it’s difficult to beat out the national mortgage brands.
But Idaho Central Credit Union did just that, originating $4.2 billion in home loans in the state of Idaho in 2021, per HMDA data from Richey May.
That was more than enough to take out top ranked Rocket Mortgage, which only mustered $2.4 billion.
Pretty impressive feat, and a testament to how much Idahoans like their own local lender. It’s also one of the few credit unions (if only) to rank #1 in a state.
In third was U.S. Bank with $1.3 billion, followed by Fairway Independent Mortgage with $1.2 billion, and United Wholesale Mortgage with $1.1 billion.
Spots six through 10 went to Wells Fargo, Academy Mortgage, Guild Mortgage, Glacier Bank, and Willamette Valley Bank.
So just one hometown lender the in the bunch, though it was far and away the leader.
Top Idaho Mortgage Lenders (for Home Buyers)
Ranking
Company Name
2021 Loan Volume
1.
Idaho Central CU
$1.6 billion
2.
Fairway Independent
$659 million
3.
Academy Mortgage
$525 million
4.
U.S. Bank
$487 million
5.
UWM
$476 million
6.
Supreme Lending
$469 million
7.
Wells Fargo
$440 million
8.
Glacier Bank
$433 million
9.
Willamette Bank
$430 million
10.
Chase
$389 million
As far as home purchase lending was concerned, Idaho Central was even more dominant, taking first place easily with $1.6 billion funded.
That was more than double second place Fairway Independent’s $659 million, and tripled Academy Mortgage’s $525 million.
In fourth was U.S. Bank with $487 million, followed by UWM with $476 million.
The rest of the best included Dallas-based Supreme Lending, Wells Fargo, Glacier Bank, Willamette Bank, and Chase.
Surprisingly, just the one Idaho-based company in the list, despite home purchases being pretty personal, and thus often local.
But again, Idaho’s own Idaho Central CU was easily the leader here too.
Top Refinance Lenders in Idaho (for Existing Homeowners)
Ranking
Company Name
2021 Loan Volume
1.
Idaho Central CU
$2.6 billion
2.
Rocket Mortgage
$2.0 billion
3.
U.S. Bank
$721 million
4.
UWM
$670 million
5.
Wells Fargo
$663 million
6.
Freedom Mortgage
$633 million
7.
loanDepot
$592 million
8.
Fairway Independent
$554 million
9.
Guild Mortgage
$529 million
10.
Pennymac
$505 million
If we filter out purchase loans and focus only on existing homeowners who refinanced, Idaho Central was still king with $2.6 billion funded.
However, Rocket Mortgage wasn’t too far behind with $2 billion in refi originations. It then dropped off quite a bit with U.S. Bank coming in third with $721 million.
UWM and Wells Fargo took fourth and fifth, with $670 million and $663 million, respectively.
The bottom half of the top 10 included Freedom Mortgage, loanDepot, Fairway Independent, Guild Mortgage, and Pennymac.
Again, mostly bigger national brands and only the one Idaho-based lender. Perhaps there just aren’t a lot of large mortgage companies headquartered in the state.
But impressive to see Idaho Central sweep all three categories, including both home purchases and mortgage refinances.
Top Mortgage Lenders in Boise
Ranking
Company Name
2021 Loan Volume
1.
Idaho Central CU
$2.5 billion
2.
Rocket Mortgage
$1.3 billion
3.
Fairway Independent
$1.0 billion
4.
Academy Mortgage
$729 million
5.
Guild Mortgage
$614 million
6.
UWM
$611 million
7.
U.S. Bank
$539 million
8.
Movement Mortgage
$469 million
9.
Wells Fargo
$458 million
10.
Flagstar Bank
$429 million
The Best Idaho Mortgage Lenders (based on customer reviews)
We’ve discussed the biggest mortgage lenders in the state of Idaho. But what about the best?
As I always say, it’s difficult to get mortgage-specific reviews for a bank or credit union because they offer lots of different products.
There are also smaller companies that don’t necessarily make the lists above, but are still highly-rated.
For example, Meridian, Idaho-based Premier Mortgage Resources has a 4.95/5 on Zillow from nearly 300 reviews.
And Boise-based Blue Sky Financial has a 4.88/5 from nearly 150 reviews. They aren’t as big as the others, but come highly reviewed and are local to Idaho.
As for the big guys, Rocket has a 4.48/5 on Zillow, U.S. Bank has a 4.98/5, Fairway Independent a 4.95/5, and Wells Fargo a 4.95/5.
So there appear to be good options both small and large, and local and non-local. Take the time to compare different companies, and different types of companies.
That includes credit unions, banks, nonbank lenders, and independent mortgage brokers located in the state of Idaho and beyond.
It’s time to check out the top mortgage lenders in Georgia based on their 2021 loan volume.
These mortgage companies outranked more than one thousand other lenders to take the top honors.
Overall, about $160 billion in home loans was funded in The Peach State last year, making it one of the bigger states volume-wise nationwide.
And taking the #1 spot was Rocket Mortgage, also the nation’s largest mortgage lender.
Read on to see which other companies ranked in the top 10.
Top Mortgage Lenders in Georgia (Overall)
Ranking
Company Name
2021 Loan Volume
1.
Rocket Mortgage
$12.2 billion
2.
Pennymac
$6.6 billion
3.
Wells Fargo
$5.3 billion
4.
Truist
$4.7 billion
5.
UWM
$4.7 billion
6.
Ameris Bank
$4.0 billion
7.
Newrez
$3.9 billion
8.
Freedom Mortgage
$3.8 billion
9.
AmeriHome Mortgage
$3.5 billion
10.
Fairway Independent
$3.1 billion
Detroit-based Rocket Mortgage, the nation’s biggest mortgage lender, originated an impressive $12.2 billion in home loans in Georgia last year.
That was nearly double their nearest competitor, Pennymac, per HMDA data from advisory company Richey May.
SoCal based Pennymac funded about $6.6 billion in the state last year, and only about a third of it came via the retail channel.
They mostly dole out loans via the correspondent lending channel (via smaller banks and credit unions), and through mortgage brokers in the wholesale channel.
In other words, your loan may have been originated by a different company, but backed by Pennymac.
In third was San Francisco-based Wells Fargo with $5.3 billion funded, another good showing despite their controversies.
They were followed closely by Truist Financial and United Wholesale Mortgage (UWM), both with about $4.7 billion funded.
In sixth was Atlanta, Georgia’s own Ameris Bank with a healthy $4 billion in home loan volume.
Newrez was a close seventh with $3.9 billion, followed by Freedom Mortgage, AmeriHome, and Fairway Independent Mortgage.
Top Mortgage Lenders in Georgia (for Home Buyers)
Ranking
Company Name
2021 Loan Volume
1.
Pennymac
$3.5 billion
2.
Rocket Mortgage
$2.6 billion
3.
Ameris Bank
$2.4 billion
4.
UWM
$2.3 billion
5.
Homestar Financial
$2.2 billion
6.
Truist
$2.1 billion
7.
Fairway Independent
$2.1 billion
8.
Wells Fargo
$1.9 billion
9.
Newrez
$1.9 billion
10.
AmeriHome Mortgage
$1.9 billion
If we consider only home purchase lending, the list changes quite a bit and new names surface.
Pennymac was the #1 home purchase lender in Georgia with $3.5 billion funded, followed by Rocket Mortgage with $2.6 billion.
Ameris Bank took third with $2.4 billion, meaning about 60% of their total mortgage business is home purchase loans.
In fourth was UWM with $2.3 billion, followed by Gainesville, GA-direct lender Homestar Financial with $2.2 billion in origination volume.
Others in the top 10 included Truist Financial, Fairway Independent, Wells Fargo, Newrez, and AmeriHome.
Top Refinance Lenders in Georgia (for Existing Homeowners)
Ranking
Company Name
2021 Loan Volume
1.
Rocket Mortgage
$9.5 billion
2.
Freedom Mortgage
$3.3 billion
3.
Pennymac
$3.1 billion
4.
Wells Fargo
$3.1 billion
5.
UWM
$2.4 billion
6.
Truist
$2.2 billion
7.
loanDepot
$2.2 billion
8.
Mr. Cooper
$2.0 billion
9.
Newrez
$2.0 billion
10.
Better Mortgage
$1.8 billion
Now let’s talk about the biggest refinance lenders in Georgia. As expected, Rocket Mortgage absolutely dominated with $9.5 billion funded.
That was nearly triple second place Freedom Mortgage’s $3.3 billion, a testament to how active they are in the state.
In third was Pennymac with $3.1 billion, followed closely by Wells Fargo with roughly the same amount funded.
In fifth was UWM with $2.4 billion, a strong showing since they only work with mortgage brokers via the wholesale channel.
The rest of the top 10 included Truist Financial, loanDepot, Mr. Cooper, Newrez, and struggling lender Better Mortgage.
Top Mortgage Lenders in Atlanta
Ranking
Company Name
2021 Loan Volume
1.
Rocket Mortgage
$8.7 billion
2.
Pennymac
$4.2 billion
3.
Wells Fargo
$4.0 billion
4.
UWM
$3.7 billion
5.
Truist
$3.7 billion
6.
Ameris Bank
$3.1 billion
7.
Newrez
$3.1 billion
8.
AmeriHome Mortgage
$2.6 billion
9.
Freedom Mortgage
$2.4 billion
10.
loanDepot
$2.4 billion
Top Mortgage Lenders in Augusta
Ranking
Company Name
2021 Loan Volume
1.
Rocket Mortgage
$432 million
2.
Pennymac
$429 million
3.
Queensborough National
$326 million
4.
Freedom Mortgage
$249 million
5.
Veterans United
$233 million
6.
Centerstate Bank
$230 million
7.
Wells Fargo
$227 million
8.
Truist
$221 million
9.
New American Funding
$214 million
10.
U.S. Bank
$180 million
Who Are Georgia’s Best Mortgage Lenders?
I typically head over to Zillow and check customer reviews to determine which mortgage companies are faring best in a particular state.
Here’s what I found for Georgia. Atlanta-based AmeriSave has a 4.68/5 rating from over 2,400 reviews. Not the best rating, but the most reviews by far.
Then there’s Atlanta’s Silverton Mortgage, which has a superior 4.94/5 rating from about 1,200 reviews.
Even better is Ameris Bank’s 4.95/5 rating from nearly 900 customer reviews, and fellow Atlanta lender First Option Mortgage’s 4.97/5 from about 1,000 reviews.
Honorable mention goes to Capital City Home Loans and its 4.96/5 score from 300 reviews.
As for the big, national brands, Rocket has a 4.48/5, Pennymac a 4.4/5, and Wells Fargo a 4.95/5.
So it appears there are plenty of solid options, whether you use a local, Georgia-based mortgage lender or a national brand.
Also be sure to check out some local mortgage brokers to see what they can offer.
Save more, spend smarter, and make your money go further
As we ring in the New Year, financial resolutions top our to-do lists, from saving more to finding a new, better-paying job and getting out of debt once and for all.
As you map out your next money move, take heed of some of these top market and economic predictions for added guidance.
Higher Borrowing Costs
Looking to open a new credit card or apply for a mortgage this year? It may be wise to act sooner than later.
With the broader economy improving since the financial crisis (e.g. the national unemployment rate is hovering at 5%, down from nearly 10% in 2009), economists, including Janet Yellen, chairwoman of the Federal Reserve, believe it’s time for a tightening of monetary policy (translation: boost interest rates to curb inflation.)
Fortune Magazine’s “Crystal Ball,” says we can expect a three-quarter-point increase by next Thanksgiving to 1.25%.
When the Fed raises the overnight bank-lending rate (aka the Fed Funds rate) that typically has a domino effect on interest rates for other mainly short-term financial products like credit cards and car loans.
What this means for us? If you’re in the market to borrow money, I recommend reviewing your credit ahead of any applications to see what improvements (if any) are necessary. The higher your credit score, the better chances you have of achieving the lowest interest rates on the market.
If you’re seeking to refinance or buy a home this year, also aim to lock in a rate as soon as possible. While an increase in the Fed Funds rate isn’t necessarily a precursor to higher mortgage rates, we’re already seeing an uptick on 30-year home loans to above 4%. And Fannie Mae’s National Housing Survey shows that more than 50% of consumers think mortgage rates will continue to elevate over the next year.
Finally, for those of us with adjustable rate loans (e.g. some student loans and mortgages) we may want to pay off our debt more aggressively or refinance to a fixed-rate loan to put a lid on rising monthly payments down the road.
Less Sticker Shock in Housing
With home loan rates expected to track north, home values may see some cooling in 2017. That’s because when mortgage rates jump, demand for housing tends to slowdown, placing pressure on sale prices.
Not to mention, after riding a hot streak in recent years with prices across the country hitting near pre-recession levels, real estate experts at Zillow.com now predict a “normalizing” market with more moderate price growth of 3.6% across the country in 2017, compared to 4.8% last year.
Prepare for more affordability in areas that have experienced the steepest gains. In Los Angeles, for example, home prices have trended considerably higher in recent times (up 7.3% over the past year, alone). In 2017, though, the city can expect a tempering of home values to a growth of just 1.7%, according to real estate website Zillow.com.
As for rentals, after double-digit surges, rents in many large metro areas will also see slower growth in 2017, per Zillow. Rents across the country are expected to rise approximately 1.7 percent this year to about $1,429 per month, down from a 6% appreciation reported last year.
Partly to blame for the cool down in rent is a glut in inventory. Builders were very busy over the last few years, but the demand for new units in some hot neighborhoods like Brooklyn, N.Y. is failing short of supply.
As a result, some landlords at higher end luxury apartment buildings in that borough have been striking sweet deals with renters since last summer, The New York Times reports. For example, at 7 DeKalb, a new high rise in Brooklyn, “the landlord is offering two months of free rent with a 14-month lease, and use of the building’s fitness center and other amenities for a year without charge.”
That’s a good reminder to prospective renters everywhere that it can never hurt to negotiate, especially this year!
Have a question for Farnoosh? You can submit your questions via Twitter @Farnoosh, Facebook or email at [email protected] (please note “Mint Blog” in the subject line).
Farnoosh Torabi is America’s leading personal finance authority hooked on helping Americans live their richest, happiest lives. From her early days reporting for Money Magazine to now hosting a primetime series on CNBC and writing monthly for O, The Oprah Magazine, she’s become our favorite go-to money expert and friend.
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Wills are an essential part of estate planning, leaving instructions for how to distribute your assets and possessions after you die. Trusts are a common tool in estate planning as well, serving as a way to manage assets both before and after your death. If your will conflicts with a trust that you have set up, the trust will typically prevail. This is because, in most cases, the assets in a trust don’t technically belong to your estate any longer. They are legally owned by the trust itself, so the terms of your will don’t affect them. For help with estate planning, consider working with a financial advisor.
Will Definition
A last will and testament is a legal document that directs how to distribute your assets after your death. Among other issues, a will establishes:
Who will take possession of your cash, investments, belongings and other property
How to pay any remaining debts or obligations
Any long term or ongoing plans that you would like to make
The care and distribution of any real estate you own
Wills are an essential part of estate planning. When you die, everything that you own is collectively known as your estate, which then gets distributed among your heirs.
If you leave a will, your estate is distributed according to your wishes and that process is overseen by someone you select, known as the executor. If you die without a will, known as dying intestate, your estate is distributed according to the inheritance law of your jurisdiction. That process is overseen by someone appointed by the probate court, known as an administrator.
Under typical circumstances a will is managed through and by probate courts. Your executor will file your will with the court which in turn oversees the entire process of settling your affairs and distributing the estate’s assets. For most estates, the probate process is largely a formality. The court makes sure that your will is legal, that your estate pays its debts and that your executor has the access they need to distribute your assets.
The same process occurs if you die without a will. In that case, the probate court appoints an administrator and the court then ensures that the administrator distributes your assets according to the local inheritance laws.
Trust Definition
A trust is a legal entity created to hold, manage and oversee property. Every trust has four main components:
Contributor – The person who created the trust and contributed assets to it
Assets – The cash, property and other assets owned by the trust
Trustee – The individual or firm that manages the trust’s assets
Beneficiary – The person or persons who receive assets from the trust
When you create a trust, you put assets in its name. Once you do that the assets belong to the trust itself, not you. This is the same as with any other property transfer. The trust is a legal entity capable of owning assets, paying taxes and making distributions, so once you put something in its name that property legally belongs to the trust itself, not you.
In creating a trust, you also establish its terms. You name the trustees and the beneficiaries, and set out the terms for how the trustees should manage the trust and its assets. This includes instructions for what assets the beneficiaries will receive, along with how and when. For instance, you can leave instructions for your trustee to distribute your funds equally among your children after you die.
Can a Will Override a Trust?
There are two main circumstances in which a will can conflict with a trust. First, a will might give instructions that conflict with the terms of a trust that already exists. For example, your will might include language that leaves the family home to your children, while earlier in life you placed that house in a trust for tax purposes. Second, a will might give instructions that conflict with the terms of a trust that doesn’t exist yet, or which hasn’t yet received its assets. For example, your will might include language that distributes your investments among your children, while another section of the will might include language that places your investments in a family trust.
In the first case, the terms of the will have no authority. A will cannot override a trust that already exists, nor can it distribute or manage property already held in an existing trust. If a trust exists and holds its assets, those assets belong to the trust itself. They are not part of your estate and, as a result, are not subject to the terms of your will.
If your will gives instructions that conflict with the terms of a trust, your will’s terms will apply to the assets in your estate and the trust’s instructions will apply to the assets in the trust. The designated beneficiaries will receive their assets according to the terms of the trust.
In the second case, your will is not actually conflicting with any existing trust. Instead, it is internally contradictory and will be resolved according to local inheritance law. You can leave instructions in your will to put assets in trust. This can apply to a trust that already exists, where your will puts assets into a trust that you created earlier. It can also apply to a testamentary trust, where your will instructs the executor to create a new trust and put assets into it.
In both cases, these assets belong to your estate when you die. This means that the terms of your will govern how those assets are distributed. If one section of your will conflicts with the section of your will which creates or contributes to the trust, then the issue is that your will is internally contradictory. The trust itself is not in question, just the will.
In that case the probate court and your executor will have to determine the exact nature of the internal conflict in your will. They will then resolve that conflict according to state and local inheritance law.
Your will still cannot supersede how an existing trust manages its assets. But conflicts in your will can prevent new assets from being added to the trust. This is why, if you plan on making or managing a trust, it’s wise to have a lawyer help you write these documents.
When Should You Use a Will vs. a Trust?
Wills and trusts are, generally, the two most significant vehicles for estate planning. Broadly speaking, if you are looking to leave assets to your heirs, you will likely use one or both of these. While a full exploration of the subject is beyond the scope of this article, there are some good rules for when you should use a will vs. a trust. Wills and trusts are not mutually exclusive; their control over specific property is. Any given asset can either be put in trust or distributed by a will – but not both. However, you can manage your estate in general by putting some assets into a trust and distributing others through a will.
Wills – Good for mid-sized estates, simple transfers and instructions
In general, wills have the benefit of simplicity.
While wills do not have the tax and probate benefits of a trust, the truth is that these concerns are frequently overstated. The federal estate tax only applies to large estates, beginning at $12.92 million at time of writing. And the probate process can take some time, but it typically is only lengthy and complex for particularly large or contentious estates. If you have an ordinary scope of assets, the odds are good that neither taxes nor probate will be a burden for your heirs.
Yet, at the same time, wills are one-shot instruments. This makes good for making simple distributions and leaving direct instructions. But once the terms of the will have been carried out, the estate is closed.
The result is that wills are often a good choice when you want to leave someone an asset in its entirety, such as leaving an amount of cash or a home to one single heir. They are also good for small and mid-sized estates, as a trust would impose additional costs and complications in order to solve tax and probate issues that these estates likely will not have. Finally, wills are good for leaving instructions beyond the scope of assets, such as arranging for the care of minor children and pets.
Trusts – Good for larger estates, ongoing wishes and contestation
In general, trusts have the benefit of third-party management.
When you put money into a trust you legally hand it over to a third party. This creates costs and complications that a will does not have. The trust will require instructions and terms, and you will need to pay for a trustee to oversee the trust’s assets.
This same process, however, means that your estate moves out of your name. You can do this before death, through a living trust, after death, through a testamentary trust, or in totality, through what is known as a pour-over will. This last is a will which bequeaths all of your property to a trust, so there is no risk of accidentally leaving any assets to the probate process.
Moving assets out of your name makes trusts good for estates that are large enough to trigger tax and probate concerns, such as if your estate is worth more than $13 million at time of writing. They are also good for people who want to leave ongoing instructions after they die, for example, if you would like to ensure that a piece of property remains in the family without being sold. Finally, trusts are good for people who anticipate contested issues, as the trust will avoid the probate process that opens the door for heirs and debtors to challenge the estate.
When you’re trying to decide whether to leave assets in a will or a trust, a good rule of thumb is this:
Wills are a good choice when you have a simple transfer to make. If you want to leave someone money or property to own outright, and you are not a multimillionaire, a will may be your best option. Trusts are a good choice when you have a large or complex issue of inheritance. If your estate is worth several million dollars, or you want to ensure that your assets are transferred and managed in a specific way, a trust may be your best option.
Bottom Line
A will cannot override the terms of an existing trust. Once assets belong to a trust, they are not part of your estate and your will has no authority over them. However, if your will has terms to put assets into a trust, internal contradictions can prevent that transfer from taking place.
Estate Planning Tips
Depending on your estate and your wishes, writing your will can be a complicated process. Make sure you take the time to educate yourself about the intricacies of the process before you get started.
A financial advisor can help you with estate planning. Finding a financial advisor doesn’t need to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors in your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
Eric Reed
Eric Reed is a freelance journalist who specializes in economics, policy and global issues, with substantial coverage of finance and personal finance. He has contributed to outlets including The Street, CNBC, Glassdoor and Consumer Reports. Eric’s work focuses on the human impact of abstract issues, emphasizing analytical journalism that helps readers more fully understand their world and their money. He has reported from more than a dozen countries, with datelines that include Sao Paolo, Brazil; Phnom Penh, Cambodia; and Athens, Greece. A former attorney, before becoming a journalist Eric worked in securities litigation and white collar criminal defense with a pro bono specialty in human trafficking issues. He graduated from the University of Michigan Law School and can be found any given Saturday in the fall cheering on his Wolverines.
Tap on the profile icon to edit your financial details.
Wills are an essential part of estate planning, leaving instructions for how to distribute your assets and possessions after you die. Trusts are a common tool in estate planning as well, serving as a way to manage assets both before and after your death. If your will conflicts with a trust that you have set up, the trust will typically prevail. This is because, in most cases, the assets in a trust don’t technically belong to your estate any longer. They are legally owned by the trust itself, so the terms of your will don’t affect them. For help with estate planning, consider working with a financial advisor.
Will Definition
A last will and testament is a legal document that directs how to distribute your assets after your death. Among other issues, a will establishes:
Who will take possession of your cash, investments, belongings and other property
How to pay any remaining debts or obligations
Any long term or ongoing plans that you would like to make
The care and distribution of any real estate you own
Wills are an essential part of estate planning. When you die, everything that you own is collectively known as your estate, which then gets distributed among your heirs.
If you leave a will, your estate is distributed according to your wishes and that process is overseen by someone you select, known as the executor. If you die without a will, known as dying intestate, your estate is distributed according to the inheritance law of your jurisdiction. That process is overseen by someone appointed by the probate court, known as an administrator.
Under typical circumstances a will is managed through and by probate courts. Your executor will file your will with the court which in turn oversees the entire process of settling your affairs and distributing the estate’s assets. For most estates, the probate process is largely a formality. The court makes sure that your will is legal, that your estate pays its debts and that your executor has the access they need to distribute your assets.
The same process occurs if you die without a will. In that case, the probate court appoints an administrator and the court then ensures that the administrator distributes your assets according to the local inheritance laws.
Trust Definition
A trust is a legal entity created to hold, manage and oversee property. Every trust has four main components:
Contributor – The person who created the trust and contributed assets to it
Assets – The cash, property and other assets owned by the trust
Trustee – The individual or firm that manages the trust’s assets
Beneficiary – The person or persons who receive assets from the trust
When you create a trust, you put assets in its name. Once you do that the assets belong to the trust itself, not you. This is the same as with any other property transfer. The trust is a legal entity capable of owning assets, paying taxes and making distributions, so once you put something in its name that property legally belongs to the trust itself, not you.
In creating a trust, you also establish its terms. You name the trustees and the beneficiaries, and set out the terms for how the trustees should manage the trust and its assets. This includes instructions for what assets the beneficiaries will receive, along with how and when. For instance, you can leave instructions for your trustee to distribute your funds equally among your children after you die.
Can a Will Override a Trust?
There are two main circumstances in which a will can conflict with a trust. First, a will might give instructions that conflict with the terms of a trust that already exists. For example, your will might include language that leaves the family home to your children, while earlier in life you placed that house in a trust for tax purposes. Second, a will might give instructions that conflict with the terms of a trust that doesn’t exist yet, or which hasn’t yet received its assets. For example, your will might include language that distributes your investments among your children, while another section of the will might include language that places your investments in a family trust.
In the first case, the terms of the will have no authority. A will cannot override a trust that already exists, nor can it distribute or manage property already held in an existing trust. If a trust exists and holds its assets, those assets belong to the trust itself. They are not part of your estate and, as a result, are not subject to the terms of your will.
If your will gives instructions that conflict with the terms of a trust, your will’s terms will apply to the assets in your estate and the trust’s instructions will apply to the assets in the trust. The designated beneficiaries will receive their assets according to the terms of the trust.
In the second case, your will is not actually conflicting with any existing trust. Instead, it is internally contradictory and will be resolved according to local inheritance law. You can leave instructions in your will to put assets in trust. This can apply to a trust that already exists, where your will puts assets into a trust that you created earlier. It can also apply to a testamentary trust, where your will instructs the executor to create a new trust and put assets into it.
In both cases, these assets belong to your estate when you die. This means that the terms of your will govern how those assets are distributed. If one section of your will conflicts with the section of your will which creates or contributes to the trust, then the issue is that your will is internally contradictory. The trust itself is not in question, just the will.
In that case the probate court and your executor will have to determine the exact nature of the internal conflict in your will. They will then resolve that conflict according to state and local inheritance law.
Your will still cannot supersede how an existing trust manages its assets. But conflicts in your will can prevent new assets from being added to the trust. This is why, if you plan on making or managing a trust, it’s wise to have a lawyer help you write these documents.
When Should You Use a Will vs. a Trust?
Wills and trusts are, generally, the two most significant vehicles for estate planning. Broadly speaking, if you are looking to leave assets to your heirs, you will likely use one or both of these. While a full exploration of the subject is beyond the scope of this article, there are some good rules for when you should use a will vs. a trust. Wills and trusts are not mutually exclusive; their control over specific property is. Any given asset can either be put in trust or distributed by a will – but not both. However, you can manage your estate in general by putting some assets into a trust and distributing others through a will.
Wills – Good for mid-sized estates, simple transfers and instructions
In general, wills have the benefit of simplicity.
While wills do not have the tax and probate benefits of a trust, the truth is that these concerns are frequently overstated. The federal estate tax only applies to large estates, beginning at $12.92 million at time of writing. And the probate process can take some time, but it typically is only lengthy and complex for particularly large or contentious estates. If you have an ordinary scope of assets, the odds are good that neither taxes nor probate will be a burden for your heirs.
Yet, at the same time, wills are one-shot instruments. This makes good for making simple distributions and leaving direct instructions. But once the terms of the will have been carried out, the estate is closed.
The result is that wills are often a good choice when you want to leave someone an asset in its entirety, such as leaving an amount of cash or a home to one single heir. They are also good for small and mid-sized estates, as a trust would impose additional costs and complications in order to solve tax and probate issues that these estates likely will not have. Finally, wills are good for leaving instructions beyond the scope of assets, such as arranging for the care of minor children and pets.
Trusts – Good for larger estates, ongoing wishes and contestation
In general, trusts have the benefit of third-party management.
When you put money into a trust you legally hand it over to a third party. This creates costs and complications that a will does not have. The trust will require instructions and terms, and you will need to pay for a trustee to oversee the trust’s assets.
This same process, however, means that your estate moves out of your name. You can do this before death, through a living trust, after death, through a testamentary trust, or in totality, through what is known as a pour-over will. This last is a will which bequeaths all of your property to a trust, so there is no risk of accidentally leaving any assets to the probate process.
Moving assets out of your name makes trusts good for estates that are large enough to trigger tax and probate concerns, such as if your estate is worth more than $13 million at time of writing. They are also good for people who want to leave ongoing instructions after they die, for example, if you would like to ensure that a piece of property remains in the family without being sold. Finally, trusts are good for people who anticipate contested issues, as the trust will avoid the probate process that opens the door for heirs and debtors to challenge the estate.
When you’re trying to decide whether to leave assets in a will or a trust, a good rule of thumb is this:
Wills are a good choice when you have a simple transfer to make. If you want to leave someone money or property to own outright, and you are not a multimillionaire, a will may be your best option. Trusts are a good choice when you have a large or complex issue of inheritance. If your estate is worth several million dollars, or you want to ensure that your assets are transferred and managed in a specific way, a trust may be your best option.
Bottom Line
A will cannot override the terms of an existing trust. Once assets belong to a trust, they are not part of your estate and your will has no authority over them. However, if your will has terms to put assets into a trust, internal contradictions can prevent that transfer from taking place.
Estate Planning Tips
Depending on your estate and your wishes, writing your will can be a complicated process. Make sure you take the time to educate yourself about the intricacies of the process before you get started.
A financial advisor can help you with estate planning. Finding a financial advisor doesn’t need to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors in your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
Eric Reed
Eric Reed is a freelance journalist who specializes in economics, policy and global issues, with substantial coverage of finance and personal finance. He has contributed to outlets including The Street, CNBC, Glassdoor and Consumer Reports. Eric’s work focuses on the human impact of abstract issues, emphasizing analytical journalism that helps readers more fully understand their world and their money. He has reported from more than a dozen countries, with datelines that include Sao Paolo, Brazil; Phnom Penh, Cambodia; and Athens, Greece. A former attorney, before becoming a journalist Eric worked in securities litigation and white collar criminal defense with a pro bono specialty in human trafficking issues. He graduated from the University of Michigan Law School and can be found any given Saturday in the fall cheering on his Wolverines.
Editor’s note: This is a recurring post, regularly updated with new information and offers.
TPG staffers are huge fans of the Chase Sapphire Preferred® Card, happily paying its annual fee each year and listing it as one of the cards we can’t live without. We love that this card earns bonus points on travel and dining and allows us to transfer our points to valuable transfer partners.
And in 2021, Chase added some new perks to the card to make it even more valuable. One of these benefits is a 10% anniversary points bonus, giving cardholders a 10% bonus based on their total spend during the account anniversary year at a rate of 1 point for each $1 spent. So, for example, if you spent $100,000 on your Sapphire Preferred during your cardmember year, you would get 10,000 bonus points at the end of the year.
Since TPG values Ultimate Rewards points at 2 cents each, earning 10,000 bonus points would be like getting $200 in value. The more you spend, the more you’ll earn, and this one perk alone could help make up for some (or all) of the card’s $95 annual fee.
Let’s dive into the specifics of this benefit and how you can track your progress on the Chase Sapphire Preferred’s 10% anniversary bonus.
About the Chase Sapphire Preferred 10% anniversary bonus
Without reading the fine print, this new perk can initially sound slightly misleading. Here are the details:
10% anniversary points bonus: Each account anniversary year, you’ll earn bonus points that equal 10% of your total spend in points from purchases made with your credit card during the previous account anniversary year at a rate of 1 point for each $1 spent. “Account anniversary year” means the year beginning with your account open date through the anniversary of your account open date, and each 12 months after that.
You shouldn’t mistake this as earning 10% back of the points you earned in a given year. Instead, you’re earning 10% more points based solely on the dollars you spend during your given account anniversary.
You can think of this as simply adding 0.1% to the existing bonus categories on the Chase Sapphire Preferred. As a reminder, here’s the earning rate on the card:
So in your mind, you could add 0.1% to all of the multipliers above. In other words, you’re earning 5.1 points per dollar on Lyft purchases (through March 2025), 3.1 points per dollar on dining, 2.1 points per dollar on other travel purchases — the list goes on.
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While not a huge difference, it can certainly add up to a significant number of bonus points at the end of your cardmember year.
Related: 7 Chase Sapphire Preferred benefits you might not know about
How to track your progress for the 10% anniversary bonus
If you don’t know your account anniversary date already, visit the Ultimate Rewards portal to find this date as well as your progress toward your 10% bonus.
Click on “Rewards Activity” and you’ll find a summary of your spending, points earned, and your progress under “10% Anniversary points boost.”
My account anniversary just reset, so I haven’t yet earned many points toward my new 10% bonus. That number will increase significantly as I spend more over the coming year.
Another important thing to note here is that you won’t receive your bonus points until 60-90 days after your anniversary period is over. This is likely because Chase wants you to pay your annual fee for the next year before awarding you these bonus points.
Regardless, there’s no extra work involved for you to activate this benefit. The points will automatically accrue and deposit to your account once your anniversary resets. If you want to track your progress, you can do so under the “rewards activity” of the Ultimate Rewards portal. Otherwise, let the points fly in.
Related: How to use the Chase Sapphire Preferred hotel credit
Bottom line
If you don’t put a huge amount of spending on your card, this 10% anniversary points bonus isn’t necessarily monumental. Still, it’s another benefit that makes the Chase Sapphire Preferred a card worth getting and keeping.
For more details, check out our full review of the Chase Sapphire Preferred.
Official application link: Chase Sapphire Preferred with an 80,000-point sign-up bonus after spending $4,000 on purchases in the first three months of account opening.
The Big I Bond Letdown Comes With a Silver Lining | SmartAsset.com
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The interest rate on Series I savings bonds bonds for the last six months has been an impressive 6.89%. But investors looking to jump into new issue bonds are in for a letdown. According to the Treasury, the rate for I bonds has reset to 4.3%.
The new annualized rate went into effect May 1 and includes a 0.9% fixed rate and a 1.69% six-month inflation rate. If you’re interested in investing in I bonds or other fixed-income instruments, consider working with a financial advisor.
A Silver Lining to the Lower Interest Rate
Sure, I bonds are now paying less than they were in recent months. But, as always, things could be worse. The new rate is higher than previous estimates that were made based on known inflation data, which had pegged the rate below 4%. On the other hand, the rate paid on I bonds from May to November 2022 was a whopping 9.62%.
As of March, the annualized inflation rate was 5%, down from 6% in February and much lower than the March 2022 rate of 8.5%. The Federal Reserve’s Open Market Committee has forecast inflation for 2023 to come in between 2.8% and 4.1%, with a median prediction of 3.3% for the year.
The I bond rate is made up of two components: a fixed rate set by the Treasury as well as an added inflation rate that’s adjusted with each auction. Once set, the fixed rate is good for the life of the bond, while the inflation rate is adjusted in May and November. Interest is compounded twice per year.
Because of the lifetime fixed-rate component, buying and holding I bonds when inflation is high can be a profitable strategy once inflation drops. I bond holders who bought between May and November 2001 maintain a fixed rate of 3%, giving them an annualized rate of 6.43% for the next six months.
The highest rate being paid now on previously issued I bond is 7.04% for bonds purchased between May and November 2000. The lowest return is 3.38% being paid on several issues of bonds made when inflation and interest rates were low, with the fixed rate at 0%.
How to Buy I Bonds
Individual investors can buy up to $10,000 worth of I-bonds each calendar year, as well as an additional $5,000 in paper I-bonds using their tax refund, which they can then convert to their digital account.
I bonds can be purchased only from the TreasuryDirect.gov website. Buyers need to create an account, a process many investors have criticized as complicated and clunky. Besides your personal information, you’ll need to enter your bank account and routing numbers, along with setting up a password and security questions. The bonds are issued electronically, and the minimum purchase amount is $25.
Investors can purchase up to another $5,000 in paper bonds using their federal income tax refunds, or $10,000 for a couple filing jointly. The purchase can be made only when you file your return, using IRS Form 8888, Allocation of Refund.
I bonds can be purchased for children by setting up a “minor account” linked from the purchaser’s own TreasuryDirect account. The account is custodial and can be accessed only by the purchaser. I-bonds also can be purchased as a gift for anyone with a Social Security number, as long as the total of bonds purchased and credited to that Social Security number doesn’t exceed $10,000 that year.
Interest income from the bonds is credited to the value of the bond, rather than being directly paid out to the bondholder. Interest is tax-free at the state and local level but is taxable on your federal income tax return. The tax can be paid when the bonds are redeemed or as the interest is credited during the life of the bond. Bonds sold to pay for qualified educational expenses can be redeemed tax-free.
Bottom Line
The rate on new I bonds is lower than the previous issue but still higher than expected. The base rate is higher than before giving investors additional returns if they hold the bonds during periods of lower interest rates.
Tips for Investing in I Bonds
If you’re unsure how much of your portfolio should be devoted to bonds, use our asset allocation calculator. Based on your risk tolerance, this free tool will provide a recommendation for how much of your portfolio should be kept in stocks, bonds and cash.
A financial advisor can help integrate I-bonds into your portfolio. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
Tap on the profile icon to edit your financial details.
Rising interest rates can be good or bad news for bank stocks — sometimes both at the same time. Banks can earn more money when they can charge more for loans, but borrowers may want fewer loans, which can depress profits. Also, banks must pay more when they borrow funds. Finally, banks’ portfolios of bonds usually decline in value when interest rates rise, which can harm the bank’s balance sheets and cause investors to shy away from them. Individual banks may do better or worse when rates rise, depending on their specific markets and business model.
To figure out how bank stocks could fit into your plans, consider working with a financial advisor.
Recent Bank Stock Performance
A little more than a year after the Federal Reserve began hiking interest rates on March 16, 2022, one broad-based measure of bank stocks showed how rates can negatively affect shares of banking companies. The S&P Banks Select Industry Index, which tracks shares of 94 banks and other financial services institutions with market caps that range from less than $1 billion to $382 billion, was down 28.86% in the year ending March 30, 2023. While this was a challenging period for stocks in general, the S&P 500 Index of 500 large firms in diverse industries was down a more modest 9.29% for the same period.
This poor showing by bank stocks during a year of rate hikes contrasts with a positive annualized return of 11.51% for the previous three years. That period includes two years of stable interest rates and relatively good price performance before the rate hikes started.
This general trend is in addition to the singular failures of two large institutions, Silicon Valley Bank and Signature Bank, which were shut down by regulators during March 2022. These banks were victims of runs by depositors who rushed to withdraw funds after concerns about the banks’ stability arose.
How Interest Rates Affect Bank Stocks
The interplay between bank stocks and interest rates is not perfectly straightforward, however. Higher rates can both benefit and imperil banks. Here are some major factors affecting how bank stocks respond to interest rates:
Higher lending profits. Banks make money by lending money and their profit margins may rise when they can charge more to borrowers, which naturally helps buoy banks shares.
Less loan demand. When loans costs more, borrowers are less interested in borrowing, which can depress bank shares. Also, rate hikes tend to depress overall economic activity, which can further reduce loan demand.
Higher borrowing costs. Banks don’t just lend money. They also borrow from various sources, including the Federal Reserve, which manages overall rates by increasing the rate it charges to member banks for borrowing from it. Depositors, too, want higher rates on savings accounts and certificates of deposits, so banks have to pay more to remain competitive.
Bond portfolios. Banks can’t lend out all the money they have. They must hang onto some of their total capital as a reserve. These reserves are typically invested in bonds, which tend to decline in value when rates rise – especially if those bonds are hold-to-maturity fixed-income securities. If the value of these reserves declines enough, it can make banks vulnerable to customer withdrawals, trigger regulatory scrutiny and, potentially, being shut down. Investors who see declining reserves often unload bank stocks, causing prices to fall. The problems at Silicon Valley Bank, Signature bank and First Republic, for example, were caused in part by steep declines in the value of their portfolios of bonds, which limited their ability to raise money to pay off depositors when bank runs gathered momentum.
Interest rates aren’t the only economic factors that affect banks. For instance, central banks tend to increase rates when economies are strong, because strong economies tend to bring about inflation. Loan demand tends to be strong when the economy is, so for a while at least when rates rise some banks may enjoy continued good demand for their relatively high-priced loans.
Also, much depends on the circumstances of individual banks. For example, Silicon Valley Bank failed while nearly all other banks survived the challenging economic climate, in part, because it had as customers a higher-than-average percentage of venture capitalists. At the same time shares in the more-diversified JPMorgan Chase & Co., the nation’s largest bank, were down only about 4% during the year after the rate hikes started. That’s much less than the S&P bank index and better than the overall stock market performance.
The Bottom Line
Banks and interest rates have a complex relationship that includes the opportunity to earn more profit from lending when rates rise, but only if they can overcome the obstacle of higher borrowing costs for their own funds. The round of rate hikes that began in March 2023, along with other influences, has led to a steep decline in the value of the typical bank stock. This suggests that most banks, in the eyes of investors, are not being helped by higher interest rates. However, broad characterizations of the impact of rising rates on bank stocks may be inaccurate in the case of individual stocks.
Investing Tips
To better understand how investing in banks and financial services companies can play a role in your portfolio, consider talking to a financial advisor. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
Interest rates affect far more than bank stocks. The SmartAsset guide to interest rates shows how rate trends impact many aspects of your personal financial life, from the cost of a new mortgage to the return on your savings account.
Mark Henricks
Mark Henricks has reported on personal finance, investing, retirement, entrepreneurship and other topics for more than 30 years. His freelance byline has appeared on CNBC.com and in The Wall Street Journal, The New York Times, The Washington Post, Kiplinger’s Personal Finance and other leading publications. Mark has written books including, “Not Just A Living: The Complete Guide to Creating a Business That Gives You A Life.” His favorite reporting is the kind that helps ordinary people increase their personal wealth and life satisfaction. A graduate of the University of Texas journalism program, he lives in Austin, Texas. In his spare time he enjoys reading, volunteering, performing in an acoustic music duo, whitewater kayaking, wilderness backpacking and competing in triathlons.