Average mortgage rates edged higher yesterday. Although the change was negligible, it was enough to return them to their recent high, first reached last Thursday. However, they’re still way lower than the near-8% levels seen as recently as last October.
Earlier this morning, markets were signaling that mortgage rates today might barely move. However, these early mini-trends often switch direction or speed as the hours pass.
Current mortgage and refinance rates
Find your lowest rate. Start here
Program
Mortgage Rate
APR*
Change
Conventional 30-year fixed
7.36%
7.37%
+0.01
Conventional 15-year fixed
6.76%
6.79%
Unchanged
Conventional 20-year fixed
7.06%
7.09%
Unchanged
Conventional 10-year fixed
6.65%
6.68%
-0.01
30-year fixed FHA
6.42%
7.11%
+0.03
30-year fixed VA
6.71%
6.83%
-0.01
5/1 ARM Conventional
6.18%
7.32%
-0.01
Rates are provided by our partner network, and may not reflect the market. Your rate might be different. Click here for a personalized rate quote. See our rate assumptions See our rate assumptions here.
Should you lock your mortgage rate today?
Many investors now expect the Federal Reserve to implement its first cut in general interest rates in June. And to make only three modest cuts during 2024.
That’s very different from their expectations at the start of this year. Then, they thought the first cut would be in March followed by five more before Dec. 31.
It’s this shift in expectations, from the optimistic to the realistic, that largely explains why mortgage rates have been moving higher in recent weeks. And it’s my top reason for now thinking that mortgage rates probably won’t begin to trend consistently lower until well into the second (April-June) quarter.
So, for now, my personal rate lock recommendations are:
LOCK if closing in 7 days
LOCK if closing in 15 days
LOCK if closing in 30 days
LOCK if closing in 45 days
LOCKif closing in 60days
However, with so much uncertainty at the moment, your instincts could easily turn out to be as good as mine — or better. So, let your gut and your own tolerance for risk help guide you.
>Related: 7 Tips to get the best refinance rate
Market data affecting today’s mortgage rates
Here’s a snapshot of the state of play this morning at about 9:50 a.m. (ET). The data are mostly compared with roughly the same time the business day before, so much of the movement will often have happened in the previous session. The numbers are:
The yield on 10-year Treasury notes held steady 4.30%. (Neutral for mortgage rates.) More than any other market, mortgage rates typically tend to follow these particular Treasury bond yields
Major stock indexes were falling this morning. (Good for mortgage rates.) When investors buy shares, they’re often selling bonds, which pushes those prices down and increases yields and mortgage rates. The opposite may happen when indexes are lower. But this is an imperfect relationship
Oil prices climbed to $79.34 from $78.19 a barrel. (Bad for mortgage rates*.) Energy prices play a prominent role in creating inflation and also point to future economic activity
Goldprices inched down to $2,042 from $2,044 an ounce. (Neutral for mortgage rates*.) It is generally better for rates when gold prices rise and worse when they fall. Gold tends to rise when investors worry about the economy.
CNN Business Fear & Greed index — increased to 79 from 76 out of 100. (Bad for mortgage rates.) “Greedy” investors push bond prices down (and interest rates up) as they leave the bond market and move into stocks, while “fearful” investors do the opposite. So lower readings are often better than higher ones
*A movement of less than $20 on gold prices or 40 cents on oil ones is a change of 1% or less. So we only count meaningful differences as good or bad for mortgage rates.
Caveats about markets and rates
Before the pandemic, post-pandemic upheavals, and war in Ukraine, you could look at the above figures and make a pretty good guess about what would happen to mortgage rates that day. But that’s no longer the case. We still make daily calls. And are usually right. But our record for accuracy won’t achieve its former high levels until things settle down.
So, use markets only as a rough guide. Because they have to be exceptionally strong or weak to rely on them. But, with that caveat, mortgage rates today look likely to hold steady or close to steady. However, be aware that “intraday swings” (when rates change speed or direction during the day) are a common feature right now.
Find your lowest rate. Start here
What’s driving mortgage rates today?
Today
This morning brought the second reading (of three) of gross domestic product (GDP) during the fourth quarter of last year. And it will likely hardly affect mortgage rates.
Today’s figure showed growth that quarter at 3.2%. Markets had been expecting it to be unchanged from its first reading at 3.3%. And they’d already priced that figure into mortgage rates.
Ten-year Treasury notes edged lower on the news. But mortgage rates didn’t immediately follow, and the difference between the actual figure and market expectations may not be enough to change them.
Tomorrow
We’re due January’s personal consumption expenditures (PCE) price index tomorrow. This is the Federal Reserve’s favorite gauge of inflation. So it certainly has the potential to move markets and mortgage rates, not least because it could influence decisions about the timing and scope of the Fed’s future cuts in general interest rates.
Tomorrow brings four key figures: two for the all-items PCE price index and two for the “core” PCE price index. The core figure is the all-items one after volatile food and energy prices have been stripped out, something that supposedly reveals underlying inflation. The Fed focuses on core figures.
There are two figures for each of these indexes. The first shows how prices moved in the month of January. And the second is the year-over-year (YOY) number, which shows how the same prices moved between Feb. 1, 2023 and Jan. 31, 2024.
Tomorrow’s inflation and other data
Here are what markets are expecting tomorrow (with December’s actual figures in brackets):
January all-items PCE price index — 0.3% (0.2 % in December)
January core PCE price index —0.4% (0.2% in December)
YOY all-items PCE price index — 2.4% (2.6 % in December)
YOY core PCE price index —2.8% (2.8% in December)
You can see that markets are expecting a small increase in most of these measures of inflation. And, because they’re expecting them, they’ll have already priced those into mortgage rates. So, if the figures come in as forecast, mortgage rates might barely move.
However, higher-than-expected figures could push those rates upward. Conversely, lower-than-expected ones could drag them downward.
Other economic reports due tomorrow rarely move mortgage rates far or for long, especially when they’re overshadowed by a major report like the PCE price index.
Ten senior Fed officials have speaking engagements tomorrow and on Friday, all after tomorrow’s report. And those could change mortgage rates if enough of them say things that cheer up or depress investors. But we can only wait to hear their remarks.
Don’t forget you can always learn more about what’s driving mortgage rates in the most recent weekend edition of this daily report. These provide a more detailed analysis of what’s happening. They are published each Saturday morning soon after 10 a.m. (ET) and include a preview of the following week.
Recent trends
According to Freddie Mac’s archives, the weekly all-time lowest rate for 30-year, fixed-rate mortgages was set on Jan. 7, 2021, when it stood at 2.65%. The weekly all-time high was 18.63% on Sep. 10, 1981.
Freddie’s Feb. 22 report put that same weekly average at 6.90% up from the previous week’s 6.77%. But note that Freddie’s data are almost always out of date by the time it announces its weekly figures.
Expert forecasts for mortgage rates
Looking further ahead, Fannie Mae and the Mortgage Bankers Association (MBA) each has a team of economists dedicated to monitoring and forecasting what will happen to the economy, the housing sector and mortgage rates.
And here are their rate forecasts for the four quarters of 2024 (Q1/24, Q2/24 Q3/24 and Q4/24).
The numbers in the table below are for 30-year, fixed-rate mortgages. Fannie’s were updated on Feb. 12 and the MBA’s on Feb. 20.
Forecaster
Q1/24
Q2/24
Q3/24
Q4/24
Fannie Mae
6.5%
6.3%
6.1%
5.9%
MBA
6.9%
6.6%
6.3%
6.1%
Of course, given so many unknowables, both these forecasts might be even more speculative than usual. And their past record for accuracy hasn’t been wildly impressive.
Important notes on today’s mortgage rates
Here are some things you need to know:
Typically, mortgage rates go up when the economy’s doing well and down when it’s in trouble. But there are exceptions. Read ‘How mortgage rates are determined and why you should care’
Only “top-tier” borrowers (with stellar credit scores, big down payments, and very healthy finances) get the ultralow mortgage rates you’ll see advertised
Lenders vary. Yours may or may not follow the crowd when it comes to daily rate movements — though they all usually follow the broader trend over time
When daily rate changes are small, some lenders will adjust closing costs and leave their rate cards the same
Refinance rates are typically close to those for purchases.
A lot is going on at the moment. And nobody can claim to know with certainty what will happen to mortgage rates in the coming hours, days, weeks or months.
Find your lowest mortgage rate today
You should comparison shop widely, no matter what sort of mortgage you want. Federal regulator the Consumer Financial Protection Bureau found in May 2023:
“Mortgage borrowers are paying around $100 a month more depending on which lender they choose, for the same type of loan and the same consumer characteristics (such as credit score and down payment).”
In other words, over the lifetime of a 30-year loan, homebuyers who don’t bother to get quotes from multiple lenders risk losing an average of $36,000. What could you do with that sort of money?
Verify your new rate
Mortgage rate methodology
The Mortgage Reports receives rates based on selected criteria from multiple lending partners each day. We arrive at an average rate and APR for each loan type to display in our chart. Because we average an array of rates, it gives you a better idea of what you might find in the marketplace. Furthermore, we average rates for the same loan types. For example, FHA fixed with FHA fixed. The end result is a good snapshot of daily rates and how they change over time.
How your mortgage interest rate is determined
Mortgage and refinance rates vary a lot depending on each borrower’s unique situation.
Factors that determine your mortgage interest rate include:
Overall strength of the economy — A strong economy usually means higher rates, while a weaker one can push current mortgage rates down to promote borrowing
Lender capacity — When a lender is very busy, it will increase rates to deter new business and give its loan officers some breathing room
Property type (condo, single-family, town house, etc.) — A primary residence, meaning a home you plan to live in full time, will have a lower interest rate. Investment properties, second homes, and vacation homes have higher mortgage rates
Loan-to-value ratio (determined by your down payment) — Your loan-to-value ratio (LTV) compares your loan amount to the value of the home. A lower LTV, meaning a bigger down payment, gets you a lower mortgage rate
Debt-To-Income ratio — This number compares your total monthly debts to your pretax income. The more debt you currently have, the less room you’ll have in your budget for a mortgage payment
Loan term — Loans with a shorter term (like a 15-year mortgage) typically have lower rates than a 30-year loan term
Borrower’s credit score — Typically the higher your credit score is, the lower your mortgage rate, and vice versa
Mortgage discount points — Borrowers have the option to buy discount points or ‘mortgage points’ at closing. These let you pay money upfront to lower your interest rate
Remember, every mortgage lender weighs these factors a little differently.
To find the best rate for your situation, you’ll want to get personalized estimates from a few different lenders.
Verify your new rate. Start here
Are refinance rates the same as mortgage rates?
Rates for a home purchase and mortgage refinance are often similar.
However, some lenders will charge more for a refinance under certain circumstances.
Typically when rates fall, homeowners rush to refinance. They see an opportunity to lock in a lower rate and payment for the rest of their loan.
This creates a tidal wave of new work for mortgage lenders.
Unfortunately, some lenders don’t have the capacity or crew to process a large number of refinance loan applications.
In this case, a lender might raise its rates to deter new business and give loan officers time to process loans currently in the pipeline.
Also, cashing out equity can result in a higher rate when refinancing.
Cash-out refinances pose a greater risk for mortgage lenders, so they’re often priced higher than new home purchases and rate-term refinances.
Check your refinance rates today. Start here
How to get the lowest mortgage or refinance rate
Since rates can vary, always shop around when buying a house or refinancing a mortgage.
Comparison shopping can potentially save thousands, even tens of thousands of dollars over the life of your loan.
Here are a few tips to keep in mind:
1. Get multiple quotes
Many borrowers make the mistake of accepting the first mortgage or refinance offer they receive.
Some simply go with the bank they use for checking and savings since that can seem easiest.
However, your bank might not offer the best mortgage deal for you. And if you’re refinancing, your financial situation may have changed enough that your current lender is no longer your best bet.
So get multiple quotes from at least three different lenders to find the right one for you.
2. Compare Loan Estimates
When shopping for a mortgage or refinance, lenders will provide a Loan Estimate that breaks down important costs associated with the loan.
You’ll want to read these Loan Estimates carefully and compare costs and fees line-by-line, including:
Interest rate
Annual percentage rate (APR)
Monthly mortgage payment
Loan origination fees
Rate lock fees
Closing costs
Remember, the lowest interest rate isn’t always the best deal.
Annual percentage rate (APR) can help you compare the ‘real’ cost of two loans. It estimates your total yearly cost including interest and fees.
Also, pay close attention to your closing costs.
Some lenders may bring their rates down by charging more upfront via discount points. These can add thousands to your out-of-pocket costs.
3. Negotiate your mortgage rate
You can also negotiate your mortgage rate to get a better deal.
Let’s say you get loan estimates from two lenders. Lender A offers the better rate, but you prefer your loan terms from Lender B. Talk to Lender B and see if they can beat the former’s pricing.
You might be surprised to find that a lender is willing to give you a lower interest rate in order to keep your business.
And if they’re not, keep shopping — there’s a good chance someone will.
Fixed-rate mortgage vs. adjustable-rate mortgage: Which is right for you?
Mortgage borrowers can choose between a fixed-rate mortgage and an adjustable-rate mortgage (ARM).
Fixed-rate mortgages (FRMs) have interest rates that never change unless you decide to refinance. This results in predictable monthly payments and stability over the life of your loan.
Adjustable-rate loans have a low interest rate that’s fixed for a set number of years (typically five or seven). After the initial fixed-rate period, the interest rate adjusts every year based on market conditions.
With each rate adjustment, a borrower’s mortgage rate can either increase, decrease, or stay the same. These loans are unpredictable since monthly payments can change each year.
Adjustable-rate mortgages are fitting for borrowers who expect to move before their first rate adjustment, or who can afford a higher future payment.
In most other cases, a fixed-rate mortgage is typically the safer and better choice.
Remember, if rates drop sharply, you are free to refinance and lock in a lower rate and payment later on.
How your credit score affects your mortgage rate
You don’t need a high credit score to qualify for a home purchase or refinance, but your credit score will affect your rate.
This is because credit history determines risk level.
Historically speaking, borrowers with higher credit scores are less likely to default on their mortgages, so they qualify for lower rates.
For the best rate, aim for a credit score of 720 or higher.
Mortgage programs that don’t require a high score include:
Conventional home loans — minimum 620 credit score
FHA loans — minimum 500 credit score (with a 10% down payment) or 580 (with a 3.5% down payment)
VA loans — no minimum credit score, but 620 is common
USDA loans — minimum 640 credit score
Ideally, you want to check your credit report and score at least 6 months before applying for a mortgage. This gives you time to sort out any errors and make sure your score is as high as possible.
If you’re ready to apply now, it’s still worth checking so you have a good idea of what loan programs you might qualify for and how your score will affect your rate.
You can get your credit report from AnnualCreditReport.com and your score from MyFico.com.
How big of a down payment do I need?
Nowadays, mortgage programs don’t require the conventional 20 percent down.
In fact, first-time home buyers put only 6 percent down on average.
Down payment minimums vary depending on the loan program. For example:
Conventional home loans require a down payment between 3% and 5%
FHA loans require 3.5% down
VA and USDA loans allow zero down payment
Jumbo loans typically require at least 5% to 10% down
Keep in mind, a higher down payment reduces your risk as a borrower and helps you negotiate a better mortgage rate.
If you are able to make a 20 percent down payment, you can avoid paying for mortgage insurance.
This is an added cost paid by the borrower, which protects their lender in case of default or foreclosure.
But a big down payment is not required.
For many people, it makes sense to make a smaller down payment in order to buy a house sooner and start building home equity.
Verify your new rate. Start here
Choosing the right type of home loan
No two mortgage loans are alike, so it’s important to know your options and choose the right type of mortgage.
The five main types of mortgages include:
Fixed-rate mortgage (FRM)
Your interest rate remains the same over the life of the loan. This is a good option for borrowers who expect to live in their homes long-term.
The most popular loan option is the 30-year mortgage, but 15- and 20-year terms are also commonly available.
Adjustable-rate mortgage (ARM)
Adjustable-rate loans have a fixed interest rate for the first few years. Then, your mortgage rate resets every year.
Your rate and payment can rise or fall annually depending on how the broader interest rate trends.
ARMs are ideal for borrowers who expect to move prior to their first rate adjustment (usually in 5 or 7 years).
For those who plan to stay in their home long-term, a fixed-rate mortgage is typically recommended.
Jumbo mortgage
A jumbo loan is a mortgage that exceeds the conforming loan limit set by Fannie Mae and Freddie Mac.
In 2023, the conforming loan limit is $726,200 in most areas.
Jumbo loans are perfect for borrowers who need a larger loan to purchase a high-priced property, especially in big cities with high real estate values.
FHA mortgage
A government loan backed by the Federal Housing Administration for low- to moderate-income borrowers. FHA loans feature low credit score and down payment requirements.
VA mortgage
A government loan backed by the Department of Veterans Affairs. To be eligible, you must be active-duty military, a veteran, a Reservist or National Guard service member, or an eligible spouse.
VA loans allow no down payment and have exceptionally low mortgage rates.
USDA mortgage
USDA loans are a government program backed by the U.S. Department of Agriculture. They offer a no-down-payment solution for borrowers who purchase real estate in an eligible rural area. To qualify, your income must be at or below the local median.
Bank statement loan
Borrowers can qualify for a mortgage without tax returns, using their personal or business bank account. This is an option for self-employed or seasonally-employed borrowers.
Portfolio/Non-QM loan
These are mortgages that lenders don’t sell on the secondary mortgage market. This gives lenders the flexibility to set their own guidelines.
Non-QM loans may have lower credit score requirements, or offer low-down-payment options without mortgage insurance.
Choosing the right mortgage lender
The lender or loan program that’s right for one person might not be right for another.
Explore your options and then pick a loan based on your credit score, down payment, and financial goals, as well as local home prices.
Whether you’re getting a mortgage for a home purchase or a refinance, always shop around and compare rates and terms.
Typically, it only takes a few hours to get quotes from multiple lenders — and it could save you thousands in the long run.
Time to make a move? Let us find the right mortgage for you
Current mortgage rates methodology
We receive current mortgage rates each day from a network of mortgage lenders that offer home purchase and refinance loans. Mortgage rates shown here are based on sample borrower profiles that vary by loan type. See our full loan assumptions here.
I grew up east of Rochester, in Upstate New York’s apple country. New York produces ~30 million bushels of apples per year, second among the 50 states (behind Washington).
But apples start to rot 5-7 days after they’re picked. So how does New York harvest 30 million bushels of apples in September and October without eating 30 million bushels over the following week?
The answer is cold storage.
Apples can be stored near 35°F for 6-12 months without decay. We gain an entire year of “freshness!” But first, we must put forth an effort of time, resources, and money to build that cold storage infrastructure.
Today’s effort allows us to keep more of our harvest in the long run. We get to choose our consumption schedule, not Mother Nature.
Roth Conversions
It might seem like an odd transition, but the same concept applies to Roth conversions. Today’s planning can allow us to keep more of our “harvest” in the long run. We gain control over our tax schedule rather than leaving it entirely up to the IRS.
Roth conversions are among many tools in a good “tax planning toolbelt.” Done correctly, Roth conversions allow an investor to turn high tax rates in the future into lower tax rates today. This article was inspired by Catherine (a listener of The Best Interest Podcast), who wrote me the following email:
Can you please explain the connection between RMDs and Roth conversions? Is this something I should look into? I’m 57, single, and have ~$2.3M in my 401k right now.
An Example: Required Minimum Distributions
Most retirees have heard of required minimum distributions, or RMDs, which are mandatory withdrawals that individuals with tax-deferred retirement accounts, like Traditional IRAs and 401(k)s, must make once they reach a specific age.
RMDs are forced. You must withdraw money from your 401k. Thus, the income tax associated with RMDs is forced. That’s not ideal.
Let’s use Catherine as an example. She’ll start taking RMDs at age 73 (although Congress might change that minimum age, as they’ve done before). That’s 16 years from her current age 57.
We don’t know the rest of Catherine’s scenario. Her Roth assets, taxable assets, Social Security, etc. are a mystery to us. So is her monthly spending need. All that info is essential to proper planning!
But I want to be extreme, so we’ll say Catherine’s lifestyle is wholly supported by her Social Security, taxable assets, and Roth assets. She doesn’t withdraw a single dollar from her 401k. Thus, it will grow from $2.3M today to $6M by the time she’s 73 (the assumption: 16 years at 6% per year).
Now in 2040, it’s time for her first RMD.
To calculate that RMD, we’ll look at Catherine’s year-end account value from the prior year ($6.0M) and divide it by her age-based Life Expectancy Factor. For age 73, that factor is presently 26.5. Here’s the full table of Life Expectancy Factors.
Catherine’s RMD is $6M / 26.5 = $226,415
That entire RMD is taxable as income, so her marginal Federal tax bracket is 32% based on the current tax code.
I’d bet Catherine’s account continues to grow past 2040, despite the RMD withdrawals. Her first 10 RMDs are all in the 4-5% range, and we’d expect her investment growth to outpace that. Her RMDs will grow in size. And that means she’ll be paying higher and higher marginal taxes in the 32% bracket, the 35% bracket, and potentially even the 37% bracket.
How Can Roth Conversions Help?
Paying high tax rates on RMDs is like letting your apples rot during the glut of harvest season. We need a “cold storage” to gain control over our tax rates and spread those taxes over time.
So let’s return to 2024, while Catherine is still 57 and her 401(k) is still at $2.3M. How do Roth conversions work?
First, we need to ensure Catherine’s 401(k) – which is still active – allows “in-service Roth conversions.” If it doesn’t, Catherine will have to wait until she retires and rolls over the 401(k) into an IRA.
Some simple paperwork with Catherine’s custodian will allow her to convert a number (of her choosing) of Traditional dollars into Roth dollars. Since the Traditional dollars have never been taxed, this conversion is taxable, triggering income tax.
Those converted Roth dollars will never be taxed again! That’s fantastic. But did Catherine save money? Was this a smart move?
We’d want to know all of Catherine’s personal financial details to run an accurate analysis, but we certainly need to understand what Catherine’s tax rate is today.
Her 2024 regular taxable income is $100,000, so she’s paying Federal taxes in the marginal 24% bracket. And she has another $90,000 available in that 24% bracket this year.
We can fill that ~$90,000 space in her 24% bracket with Roth conversions. Catherine would pay 24% Federal tax on those dollars today to prevent 32% (or higher) marginal tax rates once her RMDs hit. That’s the essence of Roth conversions.
Not Too Much Roth Conversion
Catherine needs to be careful not to overdo it. And so should you.
If you’re in your high-earning years and paying high marginal taxes, the odds are Roth conversions don’t make sense for you right now. There’s no reason to move extra income into your current high tax years.
But! You might have a few low-income years as soon as you retire. Your W2 income will disappear. Your financial plan might dictate you delay Social Security for a while.
Your only income might be dividends and income from your Taxable accounts and small withdrawals from your Traditional accounts. If so, fill up those low tax brackets with Roth conversions! This is a very common strategy for new retirees.
What If…?
But even as I write this article, “What if…” questions are bombarding my head.
Retirement planning withdrawal strategies are far from one-dimensional, and what I’m describing today is a one-dimensional view. I’m only focusing on a few details to provide an example of Roth conversions. Other nuanced planning questions include:
Roth conversions and (more generally) tax planning are essential aspects of retirement planning. But just two of many aspects.
A cold-stored apple a day keeps the IRS away.
Thank you for reading! If you enjoyed this article, join 7500+ subscribers who read my 2-minute weekly email, where I send you links to the smartest financial content I find online every week.
-Jesse
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The US housing market should experience a warm return this spring, thanks to calming economic data.
The average rate for a 30-year loan declined to 6.63% from 6.69% the week prior, according to Freddie Mac on Thursday. Mortgage rates dropped for the second time in 2024 and are expected to retreat further as inflation moderates, which could help spark a housing rebound.
As most indicators point to interest rate cuts this coming year, housing experts are predicting a busier spring buying season starting in the next couple of months as more supply and demand return to the housing market thanks to the mortgage rate drop.
“So long as core inflation and economic activity continue to moderate, mortgage rates aren’t expected to rise further,” said Orphe Divounguy, senior macroeconomist at Zillow. “If layoffs remain low, and mortgage rates ease, housing market activity should rebound modestly this spring — meaning more listings coming on the market and more sales.”
Read more: Mortgage rates below 7% — is this a good time to buy a house?
Mortgage applications fall
The likelihood of a bustling spring housing market will depend heavily on where mortgage rates head next. Homebuyers have proven again they are rate-sensitive amidst today’s elevated home prices. After last week’s slight rate increase, the volume of mortgage application activity retracted 7.2% on a weekly basis, according to an application survey tracked by the Mortgage Bankers Association (MBA) for the week ending Jan. 26.
“Low existing housing supply is limiting options for prospective buyers and is keeping home price growth elevated, resulting in a one-two punch that continues to constrain home purchase activity,” said Joel Kan, MBA’s deputy chief economist.
Affordability challenges also worsened due to last week’s rate bump. The average loan size for purchase applications increased to $444,100, the largest since May 2022, according to the MBA.
Low application rates and hardship don’t mean homebuyers have disappeared, though. Redfin’s Homebuyer Demand Index — measuring buyers’ requests for home tours and other buying services on Redfin — showed that interest increased 6% over the last seven days in the week ending Jan. 28.
“I believe this year’s market will launch in the spring, once 6% rates are even more entrenched in buyers’ psyches, and more homeowners list their houses,” said Hal Bennett, a Redfin Premier agent.
Wall Street banks and industry experts expect cuts. Wells Fargo said in its 2024 annual outlook that the economy will moderate by mid-2024, prompting the Fed to cut rates by 225 basis points by early 2025. Housing experts at Fannie Mae are predicting mortgage rates will decline below 6% by the end of 2024, leveling off at about 5.8%.
During yesterday’s Federal Open Market Committee meeting, the Fed announced it is keeping its benchmark rate steady in an effort to suppress inflation to 2%. Even so, Fed Chair Jerome Powell expressed optimism that rates have peaked and a cut could come soon. But any drop is not a guarantee.
“Inflation is still too high, ongoing progress in bringing it down is not assured, and the path forward is uncertain,” Powell said during the FOMC conference.
Read more: What the Fed rate decision means for bank accounts, CDs, loans, and credit cards
The latest Personal Consumption Expenditures (PCE) index — the Fed’s preferred inflation measurement — increased 2.6% annually in December, falling below 3% for the first time since March 2021. More importantly, though, is that an annualized PCE using data from the prior three to six months is now below 2%.
“The lower inflation readings over the second half of last year are welcome,” Powell added, “but we will need to see continuing evidence to build confidence that inflation is moving down sustainably toward our goal.”
Rebecca Chen is a reporter for Yahoo Finance and previously worked as an investment tax certified public accountant (CPA).
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In a world of constantly evolving trends, the whole process of decorating your home can soon start to feel overwhelming. Just as you’ve begun to nail one trend, it can feel as if it’s already out of style.
But fear not, decorating your home doesn’t need to mean abiding by all the rules of the latest trends. In fact, a more considered approach can result in a far more timeless scheme that doesn’t quickly date and withstands the test of time.
happy rooms, that turn to the natural world for inspiration, while also prioritizing conscious consumption – steering clear of fast decor.
5 ways to mindfully decorate your home
The core and underlying message of the following home decor ideas is that your home should be personal to you, ensuring first and foremost that it’s a space that speaks to your own interests, rather than the latest interior design trends.
‘The most important thing when going about home decor is to prioritize making your space feel most like you: designing a space that is functional while having a personality,’ says interior designer Nicole Lanteri.
Nicole Lanteri
design a home that feels like you.
‘Creating a mindful approach to home decor involves a deliberate and thoughtful selection process for each item that enters your space,’ says interior designer Jennifer Davis. ‘Start by considering the purpose of each piece, ensuring that it serves a functional need or adds aesthetic value without cluttering your surroundings. Quality over quantity is key, prioritize well-made items that will endure over time and appreciate craftsmanship.’
‘Practice mindful consumption by selecting sustainable and ethically produced products, considering their environmental and social impact. Pay attention to the intentional placement of decor items, creating a balanced and harmonious arrangement that enhances the flow of your space. Ultimately, approach home decor with the question of whether each item brings you genuine happiness and contributes positively to your living space.’
Jennifer Davis
decorating with art that means something and practical items are going to serve you well and make your space feel balanced. For example, if you’re styling your coffee table, you might want a decorative tray that holds a framed family photo, a cool sculpture, and daily use items like a scented candle and your TV remotes.’
Well by Design, also recommends making the decorating process as personal as possible for a mindful approach: ‘Incorporate found objects, antiques, and vintage items that bring a sense of joy or recall a special memory. And above all else, don’t just buy to fill a space – slow curation of meaningful items that you actually love is more likely to be treasured longer and kept out of landfills – it’s a win-win for everyone. Fast design is not always the best design.’
3. Choose biophilic design
For a mindful home that’s filled with soothing decor ideas and wellness-boosting designs, one of the most important things you can do is embrace biophilic design, which is all about referencing nature through the elements you interact with.
‘Incorporating biophilic design elements can contribute to creating a mindful home,’ explains Sarah Barnard, founder of wellness-led design studio Sarah Barnard Design. ‘Nature-inspired patterns, color palettes, and materials connect interior spaces with the landscape outside, mirroring the sense of calm and wellbeing we experience in the natural world.’
Another way you can reference nature in your home decor is by opting for natural materials, which will instantly bring a feeling of nature indoors while withstanding daily wear and tear. Designer Cinzia Moretti, Creative Director at Moretti Interior Design explains: ‘My top tip is to start by paying attention to the details around and introducing more natural elements such as wood, stone, wool, cotton and rattan. Integrating these into furniture and decor items can help to get us connected harmoniously with nature and help us to get close to our environment.’
4. Embrace minimalism
‘Embrace minimalism by de-cluttering and simplifying your space, focusing on a few key pieces that bring you joy and contribute positively to the atmosphere,’ suggests Jennifer Davis.
Of course, you don’t need to be a true minimalist to follow a mindful approach throughout your home decor. Whether you’re a fan of pared-back schemes or you love decorating with patterns and color, make sure to maintain a calm environment by de-cluttering items that no longer serve a purpose or add to your home’s visual appeal. A clean home that’s free from excessive amounts of decorative items is bound to positively affect your mood and help establish a feeling of order and calm, especially important in rooms such as the bedroom.
As a starting point, consider how you can improve your storage ideas to ensure a sense of order throughout your home, which will make this concept a lot easier to follow: ‘Think about what storage options work best for you, a clutter-free home promotes calm and mindfulness,’ advises Sarah Barnard.
5. Maximize natural light
And lastly, when prioritizing mindfulness throughout your home decor, make sure to always pay close attention to lighting ideas. Maximizing natural light will further connect your home to the natural world, in turn having a positive impact on your mood. And while the dream is for each room throughout our homes to have lovely light streaming in throughout the day, this isn’t always the case. If you’re relying on artificial lighting to create a restful atmosphere, incorporate different sources for a more relaxed look, as Lauren Sullivan suggests:
‘Access to natural light is a must, but if this isn’t a feasible option, be sure to incorporate lighting from multiple sources for ambiance and a sense of coziness. Don’t ever rely solely on overhead lighting to illuminate a room. Decorate with mirrors to reflect light about a space.’
Decorating a home mindfully isn’t something that can be rushed. It’s about slowly curating a home over time that naturally evolves to reflect personality and a style that lasts beyond trend cycles. By keeping these five ideas front of mind when decorating your home, over time you’ll create a calming space that feels both personality-led and considered.
Many people are turning to the option of living with a roommate to help balance out the financial strain of rental prices. Make sure you find the right one.
Since living with someone else can turn out as a pretty terrible experience sometimes, it’s important to vet out your roommates beforehand to avoid the bad ones. We’ve all heard the horror stories of piles of dirty dishes, the garbage that’s never taken out and late-night weekday parties. You may have even experienced these frustrations first-hand.
If you haven’t looked for one before, you may wonder how to find a roommate. Fortunately, with social networks and technology, there are plenty of roommate finder apps to help your search. Here is a list of our favorites and tips for identifying what is the best roommate finder app and websites for you.
1. Roomi
Roomi uses an algorithm to match you up with a roommate that would best be suited for you. You answer questions about yourself, what you’re looking for in an ideal roommate and Roomi then works its magic to pair two matches together.
Roomi has users do quick background checks and gives the option to link social media accounts so both roommates can feel more confident and secure in the process. Once you’re ready to message a potential “roomi,” you can do so through the app so you don’t have to exchange any personal contact information until you’re ready.
2. Roomster
Roomster has listings in more than 192 countries and 18 languages. It connects potential roommates using personality traits, keyword searches and interests to help you find your ideal match.
Members can match based on testimonials from friends, hobbies, interests and questions answered through their profiles. Roomster allows users to link their social accounts, so this app tends to have more data to find the perfect match. Once you find a potential roommate that looks promising, you can connect with them through the Roomster mailbox.
3. RoomEasy
RoomEasy is kind of like the Tinder of roommate apps. With RoomEasy, you create a profile, add personal description tags from their system and browse roommate and apartment listings. You can also connect your Facebook profile and see if your potential new roommate and you have any mutual friends.
Once you find something that interests you, you’ll “like” your favorite places or potential roommates’ profiles, and if they “like” yours, you’ll be matched. Once you’re matched, you can connect through the chat app.
4. SpareRoom
SpareRoom claims it is the busiest roommate app, with a roommate match being found every three minutes on its platform. What really sets SpareRoom apart from some other roommate apps is that it has a team of real people that screen each and every ad on SpareRoom so you can ensure listings are safe and verified.
This app even hosts speed room-mating events where you can meet up with people in your community and go through a roommate speed date-like process to see if you find someone you mix well with.
5. BunkUp
BunkUp is a pretty cool app that will help you find a roommate and an apartment. With BunkUp, much like the other apps, you fill out details about yourself and what you’re looking for in a roommate and are you’re matched or “BunkedUp.”
You can look for someone to move into your open space, move into a vacant room someone else is offering or find a new roommate to look for an entirely new apartment with. BunkUp even has agents that will help you find a new apartment.
6. Circle
Circle allows you to create a profile as either someone looking for a roommate to move into your place or as someone searching for a new place to live. It shows your potential roommates based on your profile and specifications.
It even “verifies” users, which means that a user has an authenticated driver’s license connected to their profile and they’ve passed a background check. Circle always shows you the “verified” potential roommates before all others, so you know that those who show up higher on your list are real people that aren’t trying to pull a scam. You’ll also be able to chat with potential roommates and ask questions to see who you get along with best to create a positive living environment.
7. Cirtru
Website only
Cirtru has truly adapted to the digital age. It allows users to take virtual tours within the platform so you can check it out safely from wherever you are. This makes it easy to both find a roommate to fill a vacancy in your home or look for an empty room to move into.
Cirtru is especially useful for animal lovers and owners as it allows you to set your preferences based on many criteria, including pet-friendly rentals and pet-welcoming roommates.
8. RoomieMatch
Website only
RoomieMatch is all about safety. It uses human “Scam Busters” to review submissions and listings, including an IP address location check to share the actual city in which people are, so you won’t deal with many scammers. Plus, your personal info is stored offline, instead of inline, so it can’t be accessed by online hackers and spammers
As a user, you can set your RoomieMatches based on gender, sexual orientation, lifestyle choices (like smoking/non-smoking), age and pet-friendliness.
9. Diggz
Website only
Diggz matches you with roommates based on a variety of factors connected with your profile, like your lifestyle, personality and personal preferences. You’ll be able to “like” other profiles that you’d be interested in rooming with. It’s similar to dating apps where you only talk to people that you “like” and who “like” you back.
Diggz works for almost any situation, whether you’re looking for a new roommate to move in with you, you want to move in with someone else or you want to search for a new place with a new roommate.
10. Roomaters
Roomaters uses more than the preferences you set for finding a roommate. Users take a personality test that helps when matching them with potential roommates.
Plus, you’ll get to input your interests, hobbies and a bit about what kind of roommate you are (social, introverted, messy, neat freak, etc.). So whether you like music, art, rock climbing or superhero movies, you can find someone you’ll enjoy living with.
Ask the right questions before sharing a living space
No matter where you source your new roomie, it’s essential to pose some hard-hitting questions aimed at gaining insights into their way of life and financial well-being. Here are several queries to initiate the conversation:
What qualities are you seeking in a roommate?
Are you thinking about a month-to-month rental arrangement, or are you leaning towards a longer commitment, such as a year?
Could you provide an overview of your typical work hours?
Do you share your living space with any pets?
What are your usual waking and sleeping hours?
How do you typically spend your leisure time?
Are there frequent visitors in your social circle? If so, who usually comes around?
Is smoking or alcohol consumption part of your routine?
Do you have any significant food or animal-related allergies?
Are you planning to bring along any furniture items? Do you have a need for parking space, perhaps a garage? What is your approach to maintaining cleanliness and tidiness around the house?
Roommate finder apps pair you with the right person
With so many roommate finder apps out there, it’s easier than ever to locate a perfect roommate — or at least a good one. Gone are the days of blindly showing up at someone’s place or finding a creepy classified ad in the paper. If you’re looking for the ideal roommate, give one of the above apps or sites a try.
…And Rent. pairs you with the right apartment
Maybe you already know who your potential roommate will be but you’re still looking at apartments together. We can help with that, too. Just type in your target city to get started, then filter by price range, pet-friendly apartments and more to help you decide.
Morgen Henderson is a writer who grew up in Utah. She lived in the Dominican Republic for a year and a half, where she was involved in humanitarian service. Some of Morgen’s work has appeared in State of Digital, The Next Scoop and TechPatio. In her free time, she loves to travel, bake, master DIY projects and improve her Spanish skills.
Mortgage industry analysts have been watching and waiting to see what the Federal Reserve will do—or say—next about rate cuts. They’re hedging their bets that the Fed will cut rates this year and, as an indirect result, mortgage rates will fall, too, and help revive the housing market.
Watch for coverage of today’s Fed meeting in RISMedia’s Daily News tomorrow.
Economic data plays a key role in the Fed’s timing, though. A key performance metric Fed officials and economists watch is the personal consumption expenditures (PCE) price index, which measures core inflation. PCE inflation (excluding food and energy costs) rose 0.2% in December from November’s 0.1%, and increased 2.9% from a year ago, according to data released Friday from the U.S. Commerce Department.
The annual rate of core inflation in December fell from 3.2%. That’s the lowest annual rate in nearly three years. Additionally, gross domestic product (GDP) grew at a pace of 3.3% in the fourth quarter, surpassing market expectations.
These strong economic readings pushed the 10-year Treasury yield, which mortgage rates tend to track, up to 4.14% on Friday before flattening later in the day.
Fed officials have hinted in recent speeches that cooling inflation supports the case for rate cuts—but at a more measured pace than before.
As for how those cuts will drive mortgage rates, expect “slow and steady declines,” likely in the latter half of the year, said Odeta Kushi, deputy chief economist with First American Financial.
“The Fed wants to see the long and variable lags of monetary policy so they can make their way through the economy before deciding on any rate cuts,” Kushi told RISMedia, noting that anything can happen between now and the end of the year to change the Fed’s stance. “I think that the Fed has emphasized that the path to rate cuts is highly uncertain, and they’re going to take a sort of data-driven, cautious approach.”
Several Fed officials have signaled a more cautious approach to rate cuts, dimming investors’ hopes of quick action.
During a virtual speech to the Brookings Institution on Jan. 16, Federal Reserve Governor Christopher Waller said he believes the Fed’s restrictive monetary policy is “set properly” to bring down core inflation closer to the Fed’s target of 2%. However, Waller isn’t in a rush to cut rates until inflation not only reaches the Fed target rate, but stays there for a prolonged period.
“When the time is right to begin lowering rates, I believe it can and should be lowered methodically and carefully,” Waller said in his speech. “In many previous cycles, which began after shocks to the economy either threatened or caused a recession, the FOMC cut rates reactively and did so quickly and often by large amounts.
“This cycle, however, with economic activity and labor markets in good shape and inflation coming down gradually to 2 percent, I see no reason to move as quickly or cut as rapidly as in the past.”
It didn’t take long for the markets to react to Waller’s comments. The 10-year Treasury yield jumped sharply after his speech by about 30 basis points since late December and is currently hovering near 4.1% after reaching a recent low at about 3.8%.
In separate remarks earlier this month, Fed Governor Michelle Bowman, who tends to be more hawkish, said a sustained march toward the 2% inflation goal will make it more likely to lower rates to prevent the Fed’s monetary policy from being too restrictive.
“In my view, we are not yet at that point. And important upside inflation risks remain,” Bowman said in her remarks, adding that she was still willing to raise the Fed funds rate in the future if inflation stalls or ticks up again. “Restoring price stability is essential for achieving maximum employment and stable prices over the longer run.”
Mortgage industry looks to rate cuts to help spur loan activity
2023 was a painful year for housing. As mortgage rates soared near the 8% mark, existing-home sales cratered to their lowest level last year (4.09 million) since 1995 even as median home prices reached a record high of $389,800, according to data from the National Association of Realtors.
Hobbled by anemic loan originations and next-to-no refinance activity, mortgage lenders aggressively cut staff last year (especially back-office positions like underwriters and loan processors). Others merged with bigger players with strong cash positions. And some lenders threw in the towel altogether, closing up shop.
“Our data shows that your typical independent mortgage banker trimmed their employee count by more than 40% from the peak in 2021 to the most recent data points,” Mike Fratantoni, chief economist with the Mortgage Bankers Association, said in an interview with RISMedia.
Fratantoni said mortgage volume will be somewhat higher in 2024 in tandem with higher sales of new and existing homes. However, potential homebuyers—especially those with the headwind of having record-low mortgage rates—may be hesitant to make a move until rates hit a certain sweet spot.
“As we get to the low (6% range) at the end of this year and below 6% next year…that’s going to be enough to get people’s attention,” Fratantoni said.
Melissa Cohn, regional vice president of William Raveis Mortgage, points to a Fed rate cut as being a positive signal to potential homebuyers of an improving market. However, Cohn added that a notable drop in mortgage rates will likely push home prices higher due to higher demand, so buyers shouldn’t stay on the sidelines too long.
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
UK average mortgage rates fell for the first time in over two years, according to data from the Bank of England, suggesting that the burden on homeowners is easing as lower borrowing costs filter through.
The data, released on Tuesday, adds to signs of stabilisation in the property market as mortgage approvals rose for the third consecutive time to a six-month high in December.
The BoE data also showed the “effective” interest rate — the actual interest paid — on newly drawn mortgages fell by 6 basis points to 5.28 per cent in December, marking the first drop since November 2021.
“There are green shoots of a recovery in the housing market and perhaps the wider economy,” said Ashley Webb, economist at the consultancy Capital Economics.
Net mortgage approvals for house purchases rose from 49,300 in November to 50,500 last month — the highest reading since June.
Meanwhile, net approvals for remortgaging also increased from 25,700 in November to 30,800 in December, in a further sign that activity is returning to the property market.
Mortgage approvals offer an early indication of the health of the housing market. The latest figures will be closely monitored by policymakers ahead of the upcoming BoE Monetary Policy Meeting on Thursday.
Rates on popular fixed mortgage deals have started to ease from the summer, following expectations that the central bank will cut interest rates later this year. Markets expect that the BoE will hold the benchmark rate at 5.25 per cent on Thursday, but will start cutting rates in June.
The two-year fixed mortgage rates with 60 per cent loan-to-value eased to 4.9 per cent in December from 5.1 per cent in November, well below the peak of 6.2 per cent in July. Rates on popular five-year deals have also declined since the summer, the BoE data showed.
The data follows other indicators of an improving outlook for the UK property market. House prices rose at the end of last year, according to the mortgage providers Halifax and Nationwide. Meanwhile, separate data from the Royal Institution of Chartered Surveyors showed that surveyors had become more upbeat.
While mortgage approvals remained below the pre-pandemic norm of 66,000 a month, “a further fall in mortgage rates in January means they will continue to recover,” according to Webb.
Sort Your Financial Life Out with Claer Barrett
Learn how to make smarter money decisions and supercharge your personal finances in this six-part newsletter series with the FT’s Claer Barrett. From saving and investing to property and pay rises, she’ll inspire you to get more confident with your money.
The BoE also reported that net borrowing of consumer credit by individuals fell in the same period, from £2.1bn in November to £1.2bn in December.
Economists have differing views on what is driving the credit trend. For Tomasz Wieladek, chief European economist at T Rowe Price, this reflects rising real wages “as higher household disposable income means consumers need to rely less on credit for their consumption”.
However, Thomas Pugh, economist at audit and tax consulting firm RSM UK, said the significant drop in consumer credit was in line with the fall in retail sales reported by the ONS earlier in the month, adding to evidence that the economy “slipped into recession at the end of the year”.
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A strong U.S. economy will be a boon for the housing market, Mortgage Bankers Association’s (MBA) chief economist said on Thursday, as it will buoy demand and as inflation continues to fall, mortgage rates will decline as well making home loans more affordable for buyers.
The U.S. economy accelerated at a faster-than-expected clip in the fourth quarter of 2023 at 3.3 percent, the Commerce Department’s Bureau of Economic Analysis revealed on Thursday.
Meanwhile, the personal consumption expenditures (PCE) price index—the Federal Reserve’s preferred measurement of inflation’s progress—jumped by 1.7 percent during the quarter. Core PCE, which excludes the often volatile food and energy prices, increased by 2 percent.
These dynamics bode well for the housing market that has been struggling under the weight of record-high mortgage rates, sparked in part by the Fed’s hiking of rate at the most aggressive clip since the 1980s to fight soaring inflation.
The Fed’s funds rate currently sits at 5.25 to 5.5 percent—the highest they have been in two decades—and policymakers have signaled that they will slash rates should inflation come down to their 2 percent target.
But an economy that may avoid a recession as inflation moderates without the Fed’s tight monetary policy doing too much damage to the jobs market would help the housing sector.
“Stronger economic growth will benefit the housing market, keeping demand robust,” Mike Fratantoni, MBA’s chief economist, said in a statement shared with Newsweek. “Moreover, today’s report also showed further reductions in inflation, which will enable the Federal Reserve to cut rates later this year—as they have been hinting.”
Mortgage rates ticked up slightly for the week ending January 25, Freddie Mac said on Thursday, with the 30-year fixed rate averaging 6.69 percent.
“The 30-year fixed-rate has remained within a very narrow range over the last month, settling in at 6.69% this week,” Sam Khater, Freddie Mac’s chief economist, said in a statement.
Rates look to have stabilized, Khater suggested, encouraging buyers to jump off the fence.
“Despite persistent inventory challenges, we anticipate a busier spring homebuying season than 2023, with home prices continuing to increase at a steady pace,” he said.
A slowdown in rates could have a negative impact on home buyers, some analysts say.
A decline in the cost of home loans would encourage more purchases, and this increase in demand will spark competition at a time when there is a limited supply of homes for sale.
More buyers who can afford mortgages entering the market will push up prices, analysts from Goldman Sachs said this week.
The investment bank’s experts project prices to soar by 5 percent in 2024, a marked revision from their earlier expectation of a 2 percent jump. That trend will continue through next year when prices are forecast to increase by nearly 4 percent, which is also a change from a previously estimated increase of close to 3 percent.
Amid the price increases, Goldman Sachs analysts anticipate that rates will fall to 6.63 percent for the year. This drop in rates from the near 8 percent highs of November 2023, will make house loans more affordable, sparking more demand for properties.
“We have very low inventory of houses for sale, which is generally supportive of prices, along with generally stable demand that is coming from things like household formation,” Roger Ashworth, senior strategist on the structured credit team at Goldman Sachs, said this week.
On Thursday, new home sales climbed up by 8 percent in December, according to government data, while prices declined to two-year lows. The fall in prices and a rise in sales was partly due to builders offering inducements to buyers, according to Yelena Maleyev, a senior economist at KPMG.
“Builders have pivoted to building smaller homes and offering more discounts and concessions, such as mortgage rate buydowns, to bring in buyers sidelined by rising mortgage rates,” she said in a note shared with Newsweek.
But the data from the U.S. Census Bureau also showed that inventory of newly built homes fell last month after going up the previous months. There were 453,000 houses available for sale at the end of December, which accounts for 8.2 months’ worth of supply.
This constituted a 3.5 percent decline from the same time a year ago, Maleyev pointed out.
The lack of inventory also comes at a time when the used homes market has struggled. Sales are down in that segment amid a lack of supply of homes as sellers are reluctant to give up their low rates for new home loans hovering in the mid-6 percent.
This lack of supply will be key to how prices shake out and the outlook for the year is not encouraging.
“If mortgage rates fall below 6 [percent] in 2024, more owners will feel comfortable listing their homes for sale, alleviating some of the shortages, but not enough to close the supply gap,” Maleyev said.
Uncommon Knowledge
Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
Who doesn’t think swearing parrots are funny? Although you wouldn’t want your parrot talking about the clap when Aunt Beatrice comes over for Sunday dinner. I’m sure that every LO has heard their share of salty words, and they deal with much more for their clients than just a loan. Working with their client’s debts, assets, rental insurance until they buy a home, even servicing after the loan funds, you name it. Everyone across the nation is feeling the brunt of seemingly usurious homeowner insurance rates, and The Mortgage Collaborative’s Rundown tomorrow has Andrew Hellard, SVP of Products with Matic, discussing why homeowner’s insurance costs have skyrocketed. IMBs have not been retaining servicing. They needed the cash. Companies like Freedom, AmeriHome, Pennymac, and Planet Home have been buying up servicing. They will retain that customer if and when refinancing kicks in. Rate and term refis will probably go to the aggregators. They bought the servicing; they want to keep that customer. What percentage of customers will go back to the original lender, increasing the recapture rate? It may very well depend on what the customer service was like initially. (Today’s podcast can be found here and this week’s is brought to you LoanCare, successfully navigating clients and homeowners through market change for 40 years. The mortgage subservicer delivers superior customer experience through personalization and convenience via its portfolio management tool, LoanCare Analytics™, supporting MSR investors with a focus on customer engagement, liquidity, and credit risk. Hear an interview with Angel Oak Mortgage Solutions’ Tom Hutchens on his real estate market outlook for 2024 and securitizations in the Non-QM space.)
Broker and Lender Products, Programs, and Software
Mortgage leaders: The home insurance market is facing unprecedented volatility with carriers declining new business and increasing premiums to an all-time high. This can delay closings and even lead to DTI exceeding acceptable limits once insurance costs are factored in. Matic, a home insurance marketplace built for the mortgage industry, helps borrowers save time by shopping multiple A-rated carriers at once and providing transparent pricing and coverage options. With flexible integration options, Matic adds visibility and control, allowing lenders to foresee potential issues that could result in delayed closings. To learn how mortgage enterprises like New American Funding and PRMG are partnering with Matic, book a demo today.
Ready to help more borrowers tackle affordability? Click n’ Close has provided more than 1.5 billion dollars in DPA-related financing to over 6,000 borrowers through its SmartBuy suite of products, with an average of nearly $12,500 in assistance per transaction. Unlike state or municipal DPA programs, SmartBuy isn’t subject to budgetary shortfalls and offers tremendous flexibility to accommodate a wider range of borrower scenarios, making it ready to help your borrowers achieve homeownership. From start to finish, SmartBuy offers a streamlined process for all parties. With lower capital requirements and short turn times, Lenders can be up and running with SmartBuy in a snap. In addition, wholesale loan program information is available in today’s leading product pricing engines (PPEs), including Optimal Blue, MeridianLink’s Price My Loan, Lender Price, and Polly. Reach out to our wholesale (Adam Rieke, Kerry Webb and Soliman Martinez) or correspondent team (Julas Hollie) to learn more.
‘App’ [noun] – an application designed for a mobile device. ‘Optimal Blue PPE’ [proper noun] – the mortgage industry’s most widely used product, pricing, and eligibility engine. These terms probably aren’t new to you, even if vocabulary wasn’t your best subject in school. But one piece of information you won’t find in a dictionary is that the Optimal Blue PPE is now available in a native mobile app for Android and iOS. That’s right: Loan officers can put “pricing in their pocket” with complete access to scenario pricing and more, the exact moment they need it. It’s time to leave your dictionary AND your laptop behind and take the power of the Optimal Blue PPE wherever business takes you. The enhanced iOS app even includes publicly accessible pricing analysis from the Optimal Blue Mortgage Market Indices. Simply have your company’s account admin enable access today.
“Planet Management Group is your trusted and proactive partner for residential and commercial asset management. Our private clients gain access to specialized technology, expert advisory services, and clear insights into residential and commercial market opportunities. Embrace performance. Experience PMG. email or call (585) 512-1030 and discover the PMG difference today.”
Successfully managing MSR portfolios can be a lucrative endeavor, but navigating regulatory compliance, risk management, and understanding market values can be daunting. Join MQMR and MCT for a webinar on February 15th at 11am PT entitled MSR Risk Management, Compliance, and Current Market Strategies, where panelists will dive into operational and regulatory best practices, share invaluable tips to avoid common MSR management pitfalls, and provide insights into current pricing trends. The joint webinar will also explore crucial topics such as servicing regulatory developments (FHFA, GSEs, NCUA, GAAP compliance), a bulk MSR market update, trends in retained vs. released vs. co-issue, and understanding the value of your portfolio. Don’t miss this opportunity to enhance your portfolio management skills and elevate your lending income. Register today for a comprehensive session that will empower your financial strategies.
STRATMOR on Profitability
In his 1943 paper, “A Theory of Human Motivation,” Abraham Maslow identified five levels of human needs, from the most basic to the most advanced. In STRATMOR Group’s January Insights Report, Senior Partner Jim Cameron borrows from Maslow’s famed “hierarchy of needs” theory to offer mortgage lenders a real-world approach to shaping their strategies in 2024. STRATMOR’s January InFocus article, “Maslow and Mortgages – The Path to Actualization in Today’s Market,” outlines a similar hierarchy that recommends lenders get back to consistent profits before embarking on their longer-term strategic goals. Check out STRATMOR’s full January Insights Report here.
News and Industry Updates
“AnnieMac Home Mortgage is delighted to share a momentous announcement that symbolizes our commitment to progress and innovation: the unveiling of our new brand… Our new brand is a reflection of AnnieMac’s journey, capturing the spirit of adaptability and forward momentum that has defined our organization. At the heart of this evolution is the distinctive chevron symbol.” (Editor’s note: Cynics would say that “momentous” might be a stretch, reserved for things like landing on the moon, finding Amelia Earhart’s plane, or scaling Mt. Everest. But hey, if it gets more business…!)
Pennymac was recently alerted to an appraiser fraud scheme where appraisal reports were completed by an unlicensed appraiser unlawfully using the identities of other actively licensed appraisers. The appraisal reports were completed over the past two-year period and there is no evidence the appraisers whose identities were used were aware of or involved in the activity. Details are posted on the in Pennymac Announcement 24-04.
Do your clients need to access home equity? Kind Lending offers Closed End Seconds (CES) financing through piggyback and standalone programs. CES financing allows borrowers to access cash from their home equity without impacting their original loan rate.
Per the Pennymac Announcement 24-02, Jumbo LLPAs will be updated effective for all Best Efforts Commitments taken on or after Monday, January 8, 2024 as follows: Improving values on the ‘Occupancy Adjustments’ LLPA grid. Updating values for the ‘Purchase’ LLPA on the ‘Loan Purpose Adjustments’ LLPA grid.
Capital Markets
The United States cannot be an island of prosperity. This week has been an excellent example of how international events can impact domestic mortgage rates. Germany’s economy is in the doldrums. Houthi rebel attacks on ships and allied responses in the Red Sea have resulted in a spike in producer costs that is likely to be passed along to consumers, hurting the Fed’s quest to return U.S. inflation to its 2 percent target. China has ramped up stimulus, saying it will reduce the reserve requirement ratio for banks by 50 basis points in early February, a move that will add $139 billion in liquidity to the market, but also stoked fears of larger contagion. The release of flash Manufacturing and Services Purchasing Manager Indices readings from major world economies mostly showed an ongoing contraction, providing markets ammo for pricing in early and deep Fed rate cuts. And quarterly corporate earnings results for companies around the globe, with a particular focus on forward looking guidance, has investors less convinced of signs that the Fed’s historic tightening cycle will tilt the economy into recession.
In this country, bond prices, and therefore rates, are based on supply & demand and we learned yesterday that the Treasury sold $61 billion in 5-year notes to weak demand. Part of that stems from stock market highs and consumer sentiment in January rebounding to the highest level since mid-2021, but also from cautious “Fed speak” recently and stronger than expected data. Attention now turns to GDP from Q4 of last year. Real GDP growth is seen slowing from Q3’s unsustainably robust 4.9 percent annualized increase and is expected to show that the economy expanded at a 2 percent annual rate in the final three months of 2023. Household spending is expected to be the main driver of both stronger growth and overall spending than was anticipated at the start of the quarter. Those factors may keep the economy from dipping into a recession even if there isn’t much help from other sources of growth. In fact, household incomes are now outpacing inflation.
Today’s economic calendar begins a deluge of data over the next several sessions and was kicked off by advanced Q4 Gross Domestic Product (+3.3 percent). GDP was expected to increase 1.3 percent versus 4.9 percent previously, with final sales 2.5 percent higher versus 3.6 percent in Q3. The core Personal Consumption Expenditure (PCE) Deflator registered +2.0 percent, unchanged from last month’s reading. The Price Index +1.5 percent.
We’ve also received Durable Goods Orders (flat on the month, ex-transportation +.6 percent), weekly jobless claims (+214k, 1.833 million continuing), advanced indicators for December (previous goods balance…, retail inventories …, and wholesale inventories…), and the Chicago Fed National Activity Index for December. Later today brings December new home sales, KC Fed manufacturing for January, the Treasury auctioning off $41 billion 7-year notes, and Freddie Mac’s latest Primary Mortgage Market Survey. Norges Bank was out with its latest monetary policy decision overnight (no change), as well as the European Central Bank’s decision (no change) with ECB head Lagarde’s press conference. We begin the day with Agency MBS prices a few ticks (32nds) better, the 10-year yielding 4.14 after closing yesterday at 4.18 percent, and 4.35 on the 2-year.
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Inside: Escape the cycle of being broke with insightful tactics. Learn to invest, save smartly, spot financial traps, and build secure money habits today.
You are desperate right now. You want to know why I am broke.
I get it. This is a situation I have been in before and just recently when I lost my main source of income.
The feelings of you can’t afford anything may send you down a steep spiral of depression.
So, how do we escape?
Here are the tips I used before and plan to use again.
Top Reasons for Why I am Broke
#1 – The Mindset Traps That Keep You Broke
A mindset that cultivates a sense of scarcity rather than abundance can be a massive roadblock to financial prosperity. When you’re shackled by thoughts like “I am always broke,” you unwittingly set the stage for a self-fulfilling prophecy.
The mental narrative that convinces you wealth is unattainable can keep you trapped in a loop of missed opportunities and poor financial decisions.
You may inadvertently sabotage your potential to earn more, save, or invest wisely by clinging to a defeatist paradigm.
Fixing a broken mindset is about shifting from a state of helplessness to one of deliberate, empowering action.
It starts with self-awareness and is further built through intentional positive affirmations and financial education.
Overcome By: Remember, the mind is powerful—it can be your greatest ally or your most formidable adversary. Change your money mindset.
#2 – Living Beyond Your Means: A Fast Track to Empty Pockets
Living beyond your means is akin to constantly filling a sieve with water, hoping it will someday retain more than it loses—a surefire way to financial drought. It’s a lifestyle where your outflow far exceeds your inflow, and every paycheck evaporates into the ether of consumerism.
With the advent of credit cards and buy-now-pay-later schemes, the temptation to spend money we don’t have has never been greater.
The façade of affluence conceals the grim reality of financial instability.
Acknowledging this trap is step one. Living within one’s means doesn’t imply sacrificing joy or reverting to asceticism; it’s about striking a harmonious balance between the lifestyle you desire and the one you can sensibly afford.
Overcome By: Making choices aligned with your financial reality, finding contentment in simplicity, and prioritizing financial health over transient pleasures.
#3 – Chronic Debt: Borrowing from Tomorrow for Today
Chronic debt is a pervasive issue, ensnaring individuals in a vicious cycle of borrowing today and worrying about repayment tomorrow. This pattern often stems from an urgency to fulfill immediate desires or needs without adequate financial resources.
Alarmingly, the trend of increasing consumer debt signals a culture obsessed with instant gratification as consumer debt is $16.84 trillion in Q2 2023, according to Experian. 1
Being in debt should not be normal.
The onus of breaking free from chronic debt lies in reevaluating your relationship with money. It means slowing down the urge to splurge, meticulously planning for future financial obligations, and carving a path towards debt repayment.
Overcome By: Find the discipline to not only stop accumulating debt but also to aggressively tackle existing debts through methods like debt snowball or debt avalanche strategies.
#4 – You Haven’t Learned to Plan and Budget for a Brighter Tomorrow
The lack of a strategic financial plan and a detailed budget is tantamount to navigating unknown terrain without a map. Without these critical tools, your finances are left to chance rather than choice, leaving you vulnerable to the whims of circumstance.
Budgeting is perhaps the most fundamental step toward taking ownership of your financial future. It gives you a clear snapshot of where your money is going, which is essential for making informed spending decisions.
However, many avoid the budgeting process, perceiving it as restrictive or complex. The truth is that budgeting liberates you from the anxiety that comes with uncertainty. It empowers you to align your spending with your financial goals and to find a balance between today’s necessities and tomorrow’s aspirations.
Overcome By: Choose a budgeting method whether it be the zero-based budget, the 50/30/20 rule, or the envelope system, the key is to find a method that resonates with your lifestyle and stick to it.
#5 – No Emergency Fund to Weather Financial Storms
An emergency fund is an essential bulwark against the financial tempests life invariably hurls your way. Without it, a single unforeseen event—a job loss, a medical emergency, or an urgent car repair—can capsize an already precarious financial ship. The lack of an emergency cushion extends an open invitation to debt and financial strain.
The data tells a stark tale:
A statement from the Consumer Financial Protection Bureau highlights that nearly a quarter of consumers (24%) don’t have an emergency savings account. 2
Additionally, 39% have less than a month’s worth of income saved for emergencies, setting the stage for potential financial disaster. 2
This precarious situation has become more pronounced with the increasing cost of living and high inflation rates witnessed in 2021-2023.
Overcome By: Structured, automatic savings transfers to facilitate the gradual growth of your emergency fund without it feeling like a financial blow. The goal is to build a reservoir robust enough to cover several months of living expenses, providing a comfortable buffer that can help you bounce back from setbacks without the need to borrow money at high-interest rates or liquidate precious assets at inopportune times.
#6 – Lack of Understanding of The Power of Investing
Understanding the power of investing is key to grasping the potential of a seed. A seed, given the right conditions, can grow into a flourishing tree. Similarly, investing allows your finances to grow beyond the confines of stagnant savings.
Yet, many people fail to harness this power due to a lack of understanding or fear of the unknown. This was me for many years until I decided to learn to trade stocks.
A common misconception surrounding investing is that it’s solely the playground for the rich or financially savvy. This myth steers many away from multiplying their wealth via investments, leaving them to rely solely on their primary source of income. Moreover, a lack of understanding often leads to panic during market volatility, resulting in ill-timed decisions to buy high and sell low—contrary to sound investment strategies.
Overcome By: Invest money consistently into a low-cost mutual fund or ETF that tracks the overall S&P. Then, continue your investing education on how to invest in stocks.
#7 – Wasteful Spending Habits
Wasteful spending habits are the quiet thieves of financial security. They nibble away at your earnings, leaving you wondering where your money has gone at the end of each month. This pattern often goes unnoticed, as it’s usually composed of small, seemingly insignificant purchases that accumulate over time.
The danger of wasteful spending is its subtlety.
It’s the daily coffee on the way to work, the meal out because cooking feels like too much of an effort, or the impulse buys during the sale season.
Individually, these do not seem like considerable expenses, but together, they can consume a substantial portion of your budget.
To curtail this financial leak begins with recognizing and acknowledging these habits. Tracking every penny spent can be an eye-opening experience, illustrating just how quickly the ‘little things’ can add up. With this awareness, one can then consciously decide where to cut back.
Overcome By: Adopting a minimalist approach, where value and purpose become the benchmarks for every expense, can help combat wasteful spending. Questions like, “Do I really need this?” or “Will this purchase add value to my life?” can serve as useful filters. Take up a no spend challenge to see your mindless consumption.
#8 – Fail to Recognize the Patterns That Lead to a Near-Empty Wallet
Failing to recognize the patterns that deplete your wallet is akin to ignoring the signs of a leaking roof until it caves in—it’s a disaster in the making. Often, it isn’t one significant financial blunder, but rather a series of small, recurring missteps that lead to the near-empty wallet syndrome.
For instance, routinely underestimating monthly expenses can lead to a perpetual state of surprise when the bills pile up.
Similarly, neglecting to keep tabs on bank account balances may result in overdraft fees that, over time, take a sizable bite out of your funds.
Disregarding the accumulative effects of late payment charges or routinely paying only the minimum on credit card balances can exacerbate financial distress.
Overcome By: To reverse this trend, one must become a detective in their own financial mystery. Start by scrutinizing bank statements and tracking expenses. Look for patterns, like repeated late-night online shopping sprees or habitual dining out, which contribute to the thinning of your wallet. Use budgeting apps or spreadsheets to flag these patterns visually, making it easier to identify and amend them.
#9 – How Fear and Denial Contribute to Ongoing Money Issues
Fear comes in several forms: fear of failure, fear of taking risks, and even fear of facing the truth about one’s financial situation. It can immobilize individuals, preventing them from making necessary financial changes or taking action that could otherwise mitigate or reverse money woes.
For instance, the fear of losing money might dissuade one from investing in potentially lucrative opportunities, leaving them stuck in the low-yield safety of a savings account.
Further, there’s the psychological phenomenon of denial—a defense mechanism that numbs the pain of reality. When faced with mounting debt or budgetary failure, denial kicks in, allowing individuals to live as if the problem doesn’t exist. Unfortunately, ignoring overdue notices or dodging calls from creditors doesn’t make debts disappear.
Denial only deepens the financial hole, often leading to larger, more complex problems.
Overcome By: To confront these challenges, it’s crucial to adopt a stance of brutal honesty with oneself. This means acknowledging fears and confronting financial shortcomings head-on. Professional help, such as financial counselors or advisors, can provide support and guidance to navigate these tricky emotional waters.
#10 – No Clear Financial Goals and Plans
The absence of clear financial goals and plans is like embarking on a voyage without a destination. It not only leads to aimless wandering but also ensures that you miss out on the focus and motivation that well-defined objectives provide.
When you lack clarity on what you’re saving for or what you wish to achieve, there is little impetus to resist the temptations of immediate gratification or to weather the short-term sacrifices that long-term gains often require.
Setting clear and measurable financial goals lays the groundwork for creating effective plans to reach them.
Overcome By: To break this cycle, begin by reflecting on what you value most and where you would like to be financially in the future. Whether it’s achieving debt freedom, owning a home, funding education, or planning for retirement, having specific goals in mind will define the purpose of your financial activities. Craft a plan that outlines the steps needed to accomplish them.
#11 – Laziness is your Game
When you approach your finances with a laissez-faire attitude, it’s akin to ignoring the health of a garden; without regular attention and effort, it’s bound to wither. Financial laziness can manifest in various ways, from failing to review bank statements and ignoring budgeting to neglecting opportunities to cut costs or boost income.
Each act of omission is a step closer to the financial doldrums.
Procrastination or avoidance might seem less painful at the moment, but they ultimately compound the problem. Contrary to what some might think, simple acts of financial diligence, such as cash management or regularly doing household chores, do not require Herculean effort.
Moreover, they set a foundation for sound financial habits that thwart needless spending.
Overcome By: Schedule time for financial management much like an important meeting.
#12 – Keeping up with Others is Breaking Your Bank
The urge to keep up with others—often termed the ‘Keeping up with the Joneses’ or ‘Keeping up with the Kardashians’ phenomenon—is a profound pressure that exerts an invisible, yet powerful, force on financial habits. This social comparison can lead to an insidious form of competition, one that disregards personal financial realities in favor of an illusory social standing.
It’s an impulse driven by comparison, where the benchmark of success is set not by personal satisfaction, but by the possessions and lifestyles of others.
The decision to upgrade to a luxury car, splurge on designer clothes, or redo a perfectly functional kitchen stems not from need, but from a desire to project an image that matches or surpasses those in your social sphere.
Financial guru Dave Ramsey encapsulates this philosophy with his common saying, “Live like no one else will now, so in the future, you can live like no one else can.” This means making money moves that are right for you, not those dictated by social pressures, which can sometimes involve humbler living now for a wealthier future.
Overcome By: Breaking free from the shackles of this social competition requires introspection and a bold reaffirmation of personal values. Adjusting focus towards personal financial goals and aspirations, rather than mirroring others’ spending decisions, is key.
#13 – Need Help Differentiating Needs from Wants
The blurring line between needs and wants is a common financial pitfall that can lead individuals deeper into the morass of money woes.
Needs are essentials, the non-negotiable items necessary for survival—food, shelter, healthcare, and basic utilities.
Wants, on the other hand, include anything that is not vital for basic survival but enhances comfort and enjoyment of life.
The difficulty in distinguishing between the two often stems from habituation. What starts as a luxury, like eating out at restaurants, getting a high-end smartphone, or subscribing to multiple streaming services, can quickly become perceived as essential. This is particularly difficult in a consumer-driven society, where advertising and social media constantly inflate our perception of what we ‘need’ to lead a fulfilling life.
The result? A budget that’s stretched thin on non-essentials, leaving little room for savings or investment.
Overcome By: Regularly reassess expenses and ask the hard questions about whether a purchase is genuinely essential or merely a desire dressed up as a need.
#14 – You Don’t Make Enough Money to Cover Your Expenses
When your income doesn’t cover expenses, the strain can be relentless. This financial imbalance is often the stark root of the “I am broke” refrain. In such cases, every dollar becomes precious, and the financial breathing room feels nonexistent.
The reason is straightforward: if what comes in is less than what goes out, deficits and debt are the inevitable outcomes.
Addressing this challenge requires a two-pronged approach—increasing income and/or reducing expenses. For many, reducing expenses is the immediate reflex, and while it’s an essential strategy, there’s only so much you can save, but no limit to how much you can earn.
Overcome By: Focus on making more money. This could mean asking for a raise, seeking better-paying job opportunities, pursuing a side hustle, making money online, or acquiring new skills that offer higher income potential.
Long-Term Solutions to Build a Secure Financial Future
Building a secure financial future is an aspirational goal for many, but achieving it requires a strategic approach characterized by foresight, discipline, and an understanding of personal finance.
Becoming financially independent doesn’t happen by magic chance; it’s the result of deliberate actions taken with consistency over time.
Here are the foundational blocks for constructing a sturdy financial edifice:
Invest in Financial Literacy: Knowledge is power, and this is especially true in the realm of finance. Educate yourself about budgeting, investing, insurance, taxes, and retirement planning. Reliable resources include books, online courses, podcasts, and workshops.
Set Clear Financial Goals: Define what financial success looks like for you, whether it’s being debt-free, owning a home, or achieving financial independence. Detailed goals provide direction and motivation for your financial plan.
Create a Robust Budget: A flexible budget isn’t a one-time exercise but a living document that should evolve with your financial situation. It should reflect your income, fixed and variable expenses, and financial goals.
Establish an Emergency Fund: This is the bedrock of financial security. Aim to save three to six months’ worth of living expenses to protect yourself from unforeseen circumstances without falling into debt.
Pay Off Debt: High-interest debt is a major impediment to financial growth. Utilize strategies like the debt snowball or avalanche methods to tackle debts efficiently. Once you’re debt-free, avoid accumulating new debt.
Diversify Income Streams: Relying on a single source of income is a risk. Look for opportunities to create additional streams of income, such as side businesses, freelance work, or passive income from investments.
Invest Wisely: Make your money work for you through smart investments. Consider diversified portfolios, retirement accounts, and tax-efficient investment strategies to grow your wealth over time.
Plan for Retirement: The future is closer than you think. Contribute regularly to retirement accounts like 401(k)s or IRAs. Take advantage of employer match programs if available, as they’re essentially free money.
Protect Yourself with Insurance: Ensure you have adequate insurance coverage for health, life, property, and potential liabilities. This helps to guard against catastrophic financial losses.
Breaking the Cycle of Being Broke
Just like becoming broke is often a gradual process—a few uncalculated loans, hasty investments, and numerous credit card swipes. Suddenly, financial stability seems like a far-off dream.
The same goes for breaking the cycle of being broke. It is about moving from living paycheck to paycheck with no savings, drowning in debt, and making questionable spending decisions to become financially stable.
Even though our society may see being broke as normal, it is possible to embrace financial prudence to defy such norms. It’s time to delve into the reasons behind the perpetuation of brokeness and unveil practical steps toward lasting financial freedom.
What do I do if I’m broke?
Finding yourself in a financial predicament where the end of your money arrives before your next paycheck is a stress-inducing scenario.
When faced with the stark reality of being broke, here’s a step-by-step guide to help you navigate through and set the stage for a more stable financial future:
Assess Your Situation: Take stock of all your available assets and resources. This includes checking account balances, any savings, and items you could potentially sell for quick cash. Understanding what you have can help you gauge your immediate next steps.
Prioritize Your Expenses: Sort your expenses by urgency and necessity. Essentials like rent, utilities, and groceries come first. Non-essentials or discretionary spending should be paused or significantly reduced until your financial situation improves.
Reduce Costs Immediately: Eliminate any non-essential expenses. Cancel or suspend subscriptions, memberships, or services that are not vital. Consider cheaper alternatives for necessary expenses, and utilize community resources, such as food pantries, if needed.
Negotiate with Creditors: If you’re struggling to pay your bills, proactively reach out to creditors to discuss payment options. Many are willing to work with you on a revised payment plan to avoid defaults.
Seek Additional Income Sources: Consider taking on a side job, selling unused items, freelancing, or offering your skills for short-term gigs. Even small amounts of additional income can make a significant difference when you’re broke.
Consider Assistance Programs: Look into local, state, and federal assistance programs. You may be eligible for temporary aid to help with food, housing, or utility bills.
Borrow with Caution: If borrowing is unavoidable, be cautious and choose the most cost-effective options such as loans from family or friends, a personal loan with a low-interest rate, or a hardship withdrawal from your retirement account (as a last resort).
Remember, being broke can happen to anyone, so there’s no shame in it.
The key is to take swift, decisive action to mitigate the immediate crisis while also planning longer-term strategies to prevent recurrence. By addressing the issue head-on and adjusting your financial habits, you can initiate the journey from being broke to becoming financially buoyant.
FAQ: Navigating Away from Being Broke
Finding yourself consistently broke at the end of each month is an indicator that there’s a disconnect between your income and your spending habits.
It’s often the result of several factors or behaviors that, when combined, result in a cycle of financial scarcity. Here are common reasons why this might be happening:
No Budget or Poor Budgeting
Overspending
Impulse Purchases
Lack of Emergency Savings
Failure to Track Expenses
Living paycheck to paycheck
High Debt Payments
Remember, understanding why you’re broke at the end of the month is the first step towards financial stability.
Saving money when funds seem stretched to their limit is a challenge that requires creative strategy and discipline. Even with a tight budget, there are ways to eke out savings without significantly impacting your day-to-day life.
If saving a significant amount seems daunting, start by saving your change. Physically save coins or use apps that round up your purchases to the nearest dollar and save the difference. Check out my mini savings challenges.
Saving money when it seems there’s barely enough to cover the bills begins with a commitment to take whatever steps are necessary, however small they may initially seem. Every dollar saved is a step towards financial resilience and a buffer against future financial challenges.
Investing can be a powerful tool for building wealth over the long term, and it’s often considered a key component of achieving financial stability. However, for those who are currently struggling to make ends meet, the decision to invest should be approached with caution.
Investing typically involves committing money with the expectation of achieving a future financial return. It has the potential to outpace inflation and increase your wealth due to the power of compound interest. Nevertheless, it often carries the risk of losing the invested capital, a risk that those in financial distress may not be in the position to take.
Feeling Broke without Money – Time to Make A Change
Feeling broke is a stressful and demoralizing experience, but it’s also a clarion call for change. It signals that your financial health needs attention and that your money management strategies may require a significant overhaul.
However, the situation is not without hope; with determination and the right approach, it’s possible to transform your financial landscape.
The journey away from the precipice of being broke begins with honesty, introspection, and a willingness to adapt. It’s about confronting uncomfortable truths, devising a clear plan, and taking decisive action. From crafting and adhering to a precise budget, cutting unnecessary expenses, to seeking additional income streams—all these steps are essential in the path to financial stability.
Remember, feeling broke isn’t a permanent state. Mindset is everything.
It’s a challenge to be met, an opportunity for growth, and a chance to steer the course of your financial ship towards calmer and more abundant waters. Your future self will thank you for the changes you implement today, so take that first step now.
>>>It’s time to make a change—because you deserve the peace of mind that comes with financial security.
Source
Experian. “Experian Study: U.S. Consumer Debt Reaches $16.84 Trillion in Q2 2023.” https://www.experian.com/blogs/ask-experian/research/consumer-debt-study/. Accessed January 25, 2024.
Consumer Financial Protection Bureau. “Emergency Savings and Financial Security.” https://files.consumerfinance.gov/f/documents/cfpb_mem_emergency-savings-financial-security_report_2022-3.pdf. Accessed January 25, 2024.
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