Here we go with another week. It’s been a relatively quiet day so far with little economic news impacting the markets.
That trend could continue throughout the week as there’s not many significant reports on the economic calendar.
Overall, this means that rates could stay in a tight range over the next few days. Read on for more details.
Where are mortgage rates going?
Rates are flat to start the week
The week after the monthly jobs reports gets released is historically a quiet one, so we could see rates remain in a fairly tight range over the next few days.
There’s basically no significant economic data out today in the U.S., plus it’s a banking holiday in the U.K., so the markets aren’t moving much to kick the week off.
There are a few speaking engagements from Federal Reserve officials later in the day, but it’s not likely that they’ll cause any major market reactions.
Looking back at the monthly jobs report for April, which was released on Friday, it was a slightly disappointing report with the headline reading and average hourly earnings coming in below expectations.
It wasn’t an abysmal report, but the numbers were still low, keeping in check the hawks calling for a more aggressive rate hike path in 2018.
The monthly jobs report is always one of the most closely watched reports out every month so there’s always the chance for a big market reaction when it gets released.
This time around, however, the release came and went without much fanfare.
Yes, we did see the yield on the 10-year Treasury note (the best market indicator of where mortgage rates are going) slide lower immediately after the report came out, but by the end of the day it had climbed buck up to where it was earlier in the day.
Rate/Float Recommendation
Locking now is likely the smart move
The long-term trend for mortgage rates remains for them to move higher.
If you’re considering buying a home or refinancing your current mortgage, you will most likely want to take action sooner rather than later in order to try and get the best rate.
Of course, everyone’s situation has unique factors which is why it’s so important to talk to a mortgage expert before making a final decision.
Learn what you can do to get the best interest rate possible.
Today’s economic data:
Fedspeak
Richmond Fed President Tom Barkin at 2:00pm
Dallas Fed President Robert Kaplan at 3:30pm
Chicago Fed President Charles Evans at 3:30pm
Notable events this week:
Monday:
Tuesday:
NFIB Small Business Optimism Index
JOLTS
Wednesday:
PPI-FD
10-Yr Note Auction
Fedspeak
Thursday:
Consumer Price Index
Jobless Claims
Bloomberg Consumer Comfort Index
Friday:
Fedspeak
Consumer Sentiment
*Terms and conditions apply.
Carter Wessman
Carter Wessman is originally from the charming town of Norfolk, Massachusetts. When he isn’t busy writing about mortgage related topics, you can find him playing table tennis, or jamming on his bass guitar.
Last week we saw a noticeable slowdown in housing inventory growth that I hope has more to do with a holiday week than a trend. Mortgage rates fell last week after the debt ceiling issues were resolved, but the damage from higher rates took its toll on purchase application data again.
Here’s a quick rundown of the last week:
Active inventory grew 3,180 weekly, and new listing data fell week to week and is still trending at an all-time low in 2023.
Mortgage rates fell during the week from a year-to-date high of 7.14% to 6.85% but ended at 6.90%
Purchase application data had its third straight week of negative data as the constant theme of higher rates impacted the weekly data.
Weekly housing inventory
This year’s growth in active listing inventory has been so slow that I am willing to bet that a zombie from The Walking Dead could outrun it. However, I am grateful we even saw some traditional spring inventory growth this year because new listing data is trending at all-time lows.
Weekly inventory change (May 26-June 2): Inventory rose from 433,104 to 436,284
Same week last year (May 27-June 3): Inventory rose from 357,582 to 368,436
The inventory bottom for 2022 was 240,194
The peak for 2023 so far is 472,680
For context, active listings for this week in 2015 were 1,131,405
It’s been such a different year for inventory from 2023 versus 2022 that we are heading toward an event that would have seemed impossible in earlier years: If the current inventory trend continues, we will see some negative year-over-year inventory data soon for the weekly single-family listing data.
the chart below shows the clear trend, which is why tracking inventory with rates higher now will be critical to see if there is any way to stop this reality.
One big reason for this lack of inventory growth has been new listing data, which has trended at all-time lows since the second half of 2022, continuing into 2023. We had another bad week, which I am hoping is due to the holiday. With so few new listings and stable housing demand, it’s been hard getting much of a kick in inventory growth.
Here are the number of new listings for this week over the last several years:
2021 72,643
2022 71,113
2023 55,226
With higher mortgage rates, active inventory should be growing more. This week’s data includes a holiday, so I’m looking for better numbers next week.
Purchase application data
As mortgage rates surpassed 7%, purchase application data had its third straight negative week-to-week print. The only thing that surprised me this time was that I thought purchase application data would actually decline much more than what we saw in the past three weeks. Earlier in the year, the cumulative average of the weekly declines when rates first spiked to 7.10% was -10%. Over these last three weeks, the cumulative decline was -3.93%.
For the year, we are at a wash: after making some holiday adjustments, we have had 10 positive prints versus 10 negative prints. Since Nov. 9, 2020, we have had 17 positive and 10 negative prints. After the big existing home sales report in March, we haven’t had much going on with purchase applications and it will be interesting to see if we get a positive print this week.
Mortgage rates fell and this year purchase applications have traditionally come back with a positive print after a week where the 10-year yield fell, something I talked about earlier in the year on CNBC.
The 10-year yield and mortgage rates
We had a keystone cops week with the bond market and mortgage rates. After the debt ceiling drama ended, we saw a noticeable move lower in bond yields, and rates fell. After the jobs report, the yield increased on Friday, leading to higher mortgage rates.
In my 2023 forecast, I wrote that if the economy stays firm, the 10-year yield range should be between 3.21% and 4.25%, equating tomortgage rates between 5.75% and 7.25%. I have also stressed that the 10-year level between 3.37% and 3.42% would be hard to break lower. I call it the Gandalf line in the sand: “You shall not pass.”
So far in 2023, that line has held up, as the red line in the chart below shows. Mortgage rates have been in the range of 5.99%-7.14%. However, we do have some issues in the mortgage market.
Since the banking crisis started, the spreads between the 10-year yield and 30-year fixed mortgage rates have gotten worse, keeping mortgage rates higher than usual. This has been going on for some time, but the spreads were getting better before the banking crisis started and the Federal Reserve went into emergency clean-up mode.
Getting better spreads can send mortgage rates back to the low 6% level without any help from the bond market. However, there is no sign of that happening anytime soon.
Another aspect of my 2023 forecast was that if jobless claims break over 323,000 on the four-week moving average, the 10-year yield could break under 3.21% and head toward 2.73%. This would send mortgage rates significantly lower than we have seen in 2023 if the spreads improve.
From the St. Louis Fed: Initial claims for unemployment insurance benefits increased by 2,000 in the week ended May 27, to 232,000. The four-week moving average declined, to 229,500.
The week ahead: A light economic week
This week doesn’t have much economic news, just the traditional purchase application data and jobless claims with some ISM reports. However, we should have some exciting bond market auctions after the debt ceiling drama ended since the government was running on fumes and needed to issue bonds to pay the bills. Also, it will be interesting to see how the bond market reacts after the last labor report, which I wrote about here.
OPEC is making one of its occasional cuts in oil production because a few countries need oil prices to be above $83 a barrel to make the math work for their budgets. We’ll see how the market responds to that. However, outside of that, we will be tracking to see if the lower mortgage rates helped the weekly purchase application demand data, and, hopefully, inventory growth will pick up this week.
As we get closer and closer to July 4th, I will be keeping an eye on the new listing data, as we are getting closer to the time when we start the seasonal decline in new listing data since we are trending at all-time lows already. the last thing I want to see is this data line take another leg lower toward the end of the year.
While the average mortgage rate remains stuck above 6%, buyers of new homes are getting a much better deal, according to one expert.
“So buyers out there today that are buying new homes are not paying 6.5% — the headline rate,” John Lovallo, UBS homebuilders and building products analyst, told Yahoo Finance Live (video above). “They’re paying under 5% in most cases.”
That’s another big advantage that homebuilders have in this market — their financing — in addition to capitalizing on the low inventory environment in the previously-owned home market.
Builders “have the ability to do this because of the captive finance arms that they have,” Lovallo said. “And we think that positions the public homebuilders in particular extremely, extremely well here in this environment.”
For homebuyers, a 1-percentage-point difference in the mortgage rate can significantly impact home purchasing power. The monthly mortgage payment on a $400,000 home with 20% down at 5.35% is $1,787. The payment rises to $1,991 at 6.35%. That’s over $200 more per month, or $2,400 a year.
A 2-percentage-point difference is even better. And that’s what Pulte Homes was offering earlier this year. The homebuilder recently offered a 30-year mortgage rate at 4.25% for qualified homes under construction through its financing arm. During the time it ran the special, the average rate on a 30-year mortgage ranged from 6.09% to 6.73%, according to Freddie Mac.
“By offering lower rates, we are helping to make our homes more affordable for today’s consumers.” Macey Kessler, Pulte Group’s corporate communications manager, wrote to Yahoo Finance, “Given the extremely low inventory of existing homes, providing an opportunity for consumers to purchase a new home is more important than ever.”
“What the builders have been able to do…is to help buyers find that clearing price,” Lovallo said, “whether it’s through incentives on lowering the actual price of the home or — what’s been happening more often — is buying down interest rates.”
Homebuilders are benefiting from higher average mortgage rates in another way: less competition.
Many would-be sellers feel rate-trapped by their current low mortgage rate and have decided against putting their home on the market. As a result, new homes are making up a larger portion of for-sale inventory.
More than a third of homes on the market in April were new construction, the National Association of Home Builders estimated, when that share is typically 13%. The dynamic has buoyed housing confidence among builders, which hit its highest level in 10 months in May.
“I think that what’s interesting in going back to the fact that there’s very little existing home inventory on the market, to the extent that folks are looking to buy a home, they are more inclined today than at probably at any point in history to look at a new home,” Lovallo said.
That lack of inventory is also helping to keep housing prices elevated — another boon to builders.
“Home prices have remained very resilient,” Lovallo said, “which I think is a testament to the demand that’s out there currently. Also, the fact that there is very little existing home supply.”
But for homebuyers in the market, Lovallo concedes: “It is a very tough time.”
Rebecca is a reporter for Yahoo Finance and previously worked as an investment tax certified public accountant (CPA).
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By Peter Anderson10 Comments – The content of this website often contains affiliate links and I may be compensated if you buy through those links (at no cost to you!). Learn more about how we make money. Last edited November 6, 2018.
A while back I wrote an article about 401k loans and taking early withdrawals from your retirement account. I talked about the penalties you could face, and explained why I think it’s a bad idea.
This week I was reading some economic news and came upon an article on Reuters.com that gives a startling statistic – that nearly a quarter of Fidelity’s 401(k) accounts have a loan against them.
A record number of U.S. workers are tapping into their retirement accounts to make it through the economic downturn, Fidelity Investments found in a survey released on Friday.
Among the 11 million workers whose 401(k) plans are run by Fidelity, 11 percent took out a loan from their plan during the 12 months ended June 30, the company said, up from 9 percent at the same point a year earlier.
By the end of the second quarter, plan participants with loans outstanding against their 401(k) accounts had reached 22 percent versus 20 percent a year earlier.
To me it’s crazy that of the 11 million 401(k) plans being run by Fidelity, almost 2.5 million of them have outstanding loans. Do all these people realize the penalties they could face if they lose their job and have to repay it immediately? Or is this just a sign that times are tough, and a continuing indicator that people aren’t planning ahead for emergencies, and are living in the now?
During the quarter, 2.2 pct of Fidelity’s active 401(k) participants took a hardship withdrawal, up from 2 percent a year earlier, and another peak, Fidelity said.
Often those withdrawals were used to prevent foreclosure on a home or pay college tuition.
“People have been looking to their 401(k) plans as a source of relief to help them meet financial hardships,” said Beth McHugh, a Fidelity vice president who oversees the area. “For many individuals that is their primary savings vehicle.”
Loans and withdrawals were highest among workers between 35 to 55 years old, Fidelity found, peak earnings years.
So more people are taking out loans and hardship withdrawals from their 401(k) than ever before.
Fidelity found signs of continued thrift in the workforce. The average percentage of salary saved in a 401(k) held steady at 8 percent, similar to the rate in the first quarter, while 32 percent saved 10 percent or more of their pay.
But the rising rates of loans and withdrawals show more people have turned to their savings to cover basic expenses, McHugh said. She added that second-quarter rates tend to be higher as parents look for ways to cover college tuition.
The good news is that they do see people continuing to save money in their 401(k), but in the end many of them are turning to their retirement accounts to cover even the basics – and many of them are actually taking 401k loans out to pay for their child’s education. I’d argue that this is a mistake. The child can always take out a loan, get scholarships or do other things to help pay for their own education. But short circuiting your retirement and possible gains by reducing your balance could hurt your later on – you can’t replace those gains and the compounding interest later on!
Why Taking Out A 401k Loan Is A Bad Idea
When taking out a 401k loan, usually you can borrow up to 50% of your vested account balance or $50,000, whichever is less. In most circumstances you have a maximum of five years to repay the loan, unless you are borrowing for a first home, which allows a longer payback.
I’ve written about it more than once on this site, but I think taking out 401k loans is usually a bad idea – only to be done in the worst of circumstances. Unfortunately too many people are using them to just pay off debt, buy a new car, or pay for other wants or needs, instead of taking out a loan with their local bank. Why not pay theirselves interest instead of the bank? There are quite a few good reasons why not.
You May Have To Repay Your 401k Loan Immediately If You Move Jobs Or Are Fired: One thing people don’t consider in this unsure environment is that they could lose their job and end up having to pay back their 401k loan immediately – when they can least afford to. Many plans offer a 60-90 day grace period to repay the loan, but is that really enough on a large loan of thousands of dollars?
Subject To Taxes And Penalties If Not Repaid In Time: If the loan isn’t repaid, there will be a 10% penalty, and federal and state taxes are taken out as well.
If Your Stocks Are Currently Down, You Short Circuit Possibility Of Regaining Stock Value: If you withdrew your money when the market was down, you won’t be able to regain those losses when the market goes back up.
For many people if they find themselves in a situation where they have to repay a loan, and they don’t have the money, they may be better off taking out a loan at a bank to repay the loan – and avoid those penalties and taxes. And because they have to take out a loan with most likely end up paying a higher interest rate.
So what do you think about the high rate of 401k loans, and early withdrawals? Do you think they represent a good opportunity to pay yourself interest, or are the risks associated with them too high? Would you take out a 401k loan to pay for your child’s education? Tell us your thoughts in the comments.
The thought of investing–and doing it successfully–can be a daunting task. This is especially true if you’re a beginner investor. However, if you’re willing to take advantage of the information on the best investment sites, you’ll have a wealth of investment knowledge right at your fingertips.
The top investment sites for stock news, research, and analysis can be great tools for keeping you up to date on the latest financial and economic news. As you learn more from each site, you’ll have more knowledge with which to plan your own personal investment strategy.
Of course, they’re just opinions, but they are educated opinions. Whether you’re a beginner investor or a seasoned investor, these sites have information you should check out.
Our Top Picks For Investment Sites
Motley Fool – Great For Beginner Investor & Get $100 off
Morningstar – Great For DIY Investors & 14 Day Free Trial
Market Watch – Great For Up to Date Investment News
In This Article
What Are the Top Investment Sites?
Even the best investment sites aren’t guaranteed to pick stock winners and losers. However, the people who are hired to write on the sites typically have a wealth of experience and education behind them.
There are a few investment sites that people “in the know” use when they want information about companies and other economic news. Here are some of our favorite investment sites for garnering important economic information.
Here’s a list of some of our favorite investment sites for learning what you need to know about investing and company financial information.
1 .Motley Fool Stock Advisor
Motley Fool was founded in 1993 by David and Tom Gardner, brothers. Their goal? “Make the world smarter, happier, and richer.” Sounds good to me.
The Motley Fool brothers are big believers in buying stock in great companies and holding onto it. Their site has a great section on investing for beginners.
It also shares a wealth of information on the stock market, on investing for retirement and more. The site even shares personal finance information such as where to find the best checking accounts and credit cards.
Personally, I find the site very well put together and easy to use too. I’d happily use this site (and do) whether I was just starting out as an investor or knew most everything I thought I needed to know.
Motley Fool Stock Advisor: Join for just $99 a year!
Best for: Those looking for comprehensive information on individual stock purchases
2. Morningstar
Morningstar’s tagline is “Empowering investor success.” The site stays true to its investment philosophy of putting investors first. That means they won’t give you investment advice based off of an affiliate relationship.
Instead, they share what they believe to be the best guidance for investors. Morningstar is probably best known for the ratings it publishes on varying investments.
If you want access to Morningstar ratings and detailed investment analysis, you’ll have to sign up for their premium account, which costs $199 per year. However, the site does have an endless number of free informational articles talking about all things investment-related.
Best for: Both beginner and seasoned investors who want detailed information
3. MarketWatch
MarketWatch is another top-rated investment site. It’s a good site for keeping up to day with the latest investment and economic information.
The site shares global information for most all stock markets, commodities markets, forex markets and more. The Moneyist (the Dear Abby of personal finance and investing) is a personal favorite for me.
He answers questions ranging from “Do I have enough to retire?” to “My brother won’t give me my share of our father’s inheritance. What do I do?” and more.
You can also find personal finance information on the site. MarketWatch is full of useful information, easy on the eyes and a pleasing website to navigate.
The site also shares valuable news articles from around the web, whether it be auto reviews or best retirement spots.
Best for: Anyone who wants to find up-to-date investment and other financial information quickly and easily.
4. Barron’s
Barron’s is an investment site for the serious investor. This site is formatted most like the newspapers of old. Clear and concise, Barron’s shares market information along with its favorite current stock picks.
The site’s e-magazine contains articles about popular publicly traded companies’ ups and downs. And the site’s e-advisor keeps you up to date on it’s favorite investment moves.
The articles and information are written smartly and simply. However, they assume you’ve got a solid basic understanding on investing and economics as a whole. While Barron’s is a phenomenal site for seasoned investors, beginner investors might want to stick with one of the other sites mentioned here.
Best for: The seasoned investor who wants a wide span of information on current economics and company performance.
5. Wall Street Journal
I clearly remember seeing my grandfather and his friends perusing over the Wall Street Journal in the early 90’s as they shared breakfast together at the local greasy spoon.
My family and I would eat there on occasion, but we never interrupted the group other than to say “hi” to grandpa and give him a quick hug. Yep, this group of wealthy men would never spend more than $10 for breakfast, but they all had the money to buy the cafe’ if it ever went up for sale.
Thank you, Wall Street Journal. For as long as I can remember, the Wall Street Journal has been the go-to source for those seeking investment advice. It’s changed with the times but still stayed the same, keeping its “real” paper but managing a well-put-together website too.
Wall Street Journal covers everything regarding economic markets in the U.S. and the world. And it tosses in some articles on politics, tech, and current events as well.
The online website headlines are free, but if you want complete information you’ll have to pay for the digital editions, print editions, or both. The good news is that WSJ is affordable at no more than $20 per month. Therefore, we love it as one of the best investment sites.
Best for: Investors that want to get the scoop on the markets and the rest of the world’s happenings, as well as those craving that great feeling of holding a printed newspaper in their hands.
6. Zacks
Zacks is an investment website that’s committed to independent research analysis. The Zacks “About” page says their strategy has beat the S&P market by quite a length (over double) for the past 25+ years.
Of course, past performance is not a guaranteed indicator of future results, but it sure does tell you a thing or two. Namely that the group at Zacks knows their stuff when it comes to investing.
While the site provides a wealth (no pun intended) of free information, you’ll have to pay to get the inside scoop on the Zacks investment strategy. That includes the Zacks #1 rank list of 220 of the best stocks.
They offer a 30-day free trial. After that, you’ll pay $249 a year to continue getting access to Zacks’ investment secrets.
Bonus: Zacks links to the best articles from popular sites such as MarketWatch too.
Best for: The serious investor who’s willing to take the time to learn about in-depth investing.
7. Seeking Alpha
Seeking Alpha does a great job of delving deeper into the “whys” behind investing in a particular stock or fund. While this is a terrific feature for experienced investors, beginner investors may find the information a bit lofty.
Seeking Alpha is part investment news source and part investing community. Articles are written by investor members and then rigorously scrutinized to ensure accurate information.
With over 7,000 members, there’s no shortage of investing information and opinions. The site is great for those who want to do some in-depth research on markets, stocks, and investments.
The Basic Seeking Alpha site is free. However, the site also offers a Premium membership for $240 annually and a Pro membership for roughly $2400 annually.
Think of the Premium membership as a self-directed site and the Pro membership as a full-service site. See the website for more detailed information on what you get with the upgraded memberships.
Best for: Intermediate and advanced investors looking for community support and advice
8. The Financial Times
The Financial Times (or FT as it’s often called) focuses primarily on stocks, funds, and stock news. But you’ll also find tech information, personal finance articles, and more. In-depth information on company performance rounds out the offerings.
The site has a nice collection of charts and graphics too. There are some free articles on Financial Times, but as with Wall Street Journal you’ll have to pay if you want full access.
Like Zacks, Financial Times is a bit on the spendy side if you’re not used to paying for investment information. Digital access is $39.50 per month or $369.20 per year. The print access subscription includes digital access and costs $199 per year.
You can pay $1 and get a 4-week trial if you’d like to sample Financial Times. And there are other subscription options as well.
Best for: Investors looking for a melting pot of investment and economic news, information, and opinion
9. CNBC
CNBC is a popular news channel with a focus on investment and economic news. While you can get CNBC regularly with many paid TV subscriptions, you can also access the company’s many articles for free on their website.
Current market numbers are conveniently displayed throughout the site. And you’ll find articles on investing, technology, business, politics, and more.
Under the “Investing” tab, you’ll find “Invest in You” and “Personal Finance” sections that have a wealth of articles aimed at making personal finance more, well, personal. These sections show you how to put the site’s advice into action and better your personal money situation.
If you want access to CNBC’s “PRO” content, however, you’ll have to buy a subscription. CNBC PRO gives you access to live programming, exclusive video series, and more.
It costs $29.99 per month to subscribe to CNBC PRO, or you can pay $299.00 annually. There is a 7-day trial period you can use to check it out.
Best for: those wanting a quick glance at the world’s most up-to-date economic information
10. Kiplinger
Kiplinger was started in the 1920’s by a former AP economic reporter. The Kiplinger Letter, the company’s weekly economic publication, is considered the most widely read business forecasting publication in the world, according to the Kiplinger website.
Kiplinger also has a monthly magazine. The Kiplinger website gives access to The Kiplinger Letter if you’re a member. You can find a wealth of free information on the site, including investment information. The site also shares informational articles on:
Retirement
Taxes
Wealth creation
Personal finance
And more. However, if you want the goodies like the print magazine and/or complete access to all website information, you’ll have to subscribe.
As of this writing, you can get access to print subscriptions, digital access, or both for $29.95 for 12 months or $39.90 for 24 months. But I think you might find it well worth the price.
One thing I really like about the Kiplinger site is that many of the articles are written in a way even the most beginner personal finance/investment aficionado can understand. The site has a great mix of both beginner and experienced investor articles and information.
Best for: Beginner and experienced investors who want print news and digital news
11. Stock Rover
Stock Rover makes our list of best investment sites because of its mission to help all levels of investors make informed decisions. The Stock Rover website works to provide affordable, comprehensive research to help investors learn before they invest.
The site can help you compare companies or investments, research reports, and manage your portfolio. Stock Rover’s blog includes investing articles, stock research articles, and other valuable information.
For instance, you can learn how to build a better stock portfolio. Of course, these features don’t come for free–at least not all of them. Stock Rover has four plans you can choose from, one of which is free.
While the “free” plan does provide a lot of information and articles, the paid plans provide other valuable tools. The Essentials, Premium, and Premium Plus plans range in price from $7.99 per month to $27.99 per month.
Watchlists, screens, and the number of portfolios you can manage go up with each plan. You can get additional information via other subscriptions on Stock Rover too, such as research reports plans and bundles.
Best for: People who want more of a personal touch as they invest
12. AAII
AAII, or the American Association of Individual Investors, is a non-profit organization aimed at helping people learn about investing and grow their investment portfolios. They’ve been in business for over 40 years.
The organization uses education, information, and research to help members learn about investing and manage their investments. Along with the AAII website, you may have a local chapter that meets in person in your area.
AAII has two membership options. The Basic membership is $1 for the first 30 days and then $3.25 a month going forward. You get access to the AAII market-beating portfolio, investor guides, and other information.
The Plus membership is $2 for the first 30 days and then $15.67 per month going forward. It includes additional benefits such as stock and fund evaluators and graders, and detailed portfolio analysis and alerts.
Both membership options include free access to the local chapters of AAII. In addition, you get access to the award-winning AAII Journal in digital format, print format, or both.
Best for: Those looking for investment guidance with a heart
13. Yahoo Finance
Yahoo Finance, albeit basic, is a good at-a-glance option for investment information. The site shares market numbers along with investment and economic news articles from around the web.
You’ll find links to articles from Reuters, MarketWatch, Investopedia and other well known sites. Yahoo Finance also has their own penned articles on the site. It’s a good one stop shop for economic news.
Best for: Those wanting access to current investment and economic news from a variety of sources
14. Investopedia
Last but certainly not least, we like Investopedia as one of the best investment sites for investment news. What started out as sort of a Wikipedia with a money/investing focus has morphed into a great resource for investing and economic news and information.
Along with current investment news, you can check out Investopedia’s stock simulator. And Investopedia Academy features paid online courses to help you learn everything you want to learn about investing.
The articles cover every type of investor from the beginner to the day trader. And while the courses do cost money, most of the basic information on Investopedia is free.
Best for: Those interested in an education-based investment site
Summary
With the plush selection of the best investment sites out there, there’s no reason you can’t stay up to date on current investment news. And there’s no reason that even the most beginner of investors can’t learn how to invest smartly and successfully.
There are investment sites out there for the knowledge levels and learning preferences of just about everyone on earth.
Laurie is personal finance writer and a licensed Realtor. Her goal in blogging is to help others find their way to financial freedom, and to a simpler, more peaceful life.
It feels like déjà vu. Mortgage rates are going up again. What gives? I thought they peaked.
Not so fast. The Fed warned us time and time again that this inflation fight wasn’t going to be easy. Or short.
And it appears they might be right, based on the latest economic reports released in the past week.
Simply put, the economy is too strong and inflation remains a major problem.
This explains why mortgage rates are headed back toward 7%!
Mortgage Rates Don’t Like Inflation
In early 2022, mortgage rates took off like a bottle rocket. The 30-year fixed averaged 3.22% during the first week of January, per Freddie Mac.
Rates then increased nearly every week of the year, hitting a staggering 7.08% in early November, before coming back down slightly.
The issue was (and is) inflation, which had spiraled out of control, forcing the Fed to begin aggressively raising its fed funds rate.
Long story short, the economy was overheated and prices were out of control. And only higher rates could potentially shrink the outsized money supply.
Concurrently, the Fed halted its purchases of mortgage-backed securities (MBS) and Treasuries, which was known as QE.
The absence of a huge buyer of MBS, coupled with a defensive appetite from remaining buyers, meant much higher mortgage rates.
No one could have imagined mortgage rates doubling in less than a year, but they did. It was the first time in history.
Consumer Prices Are Too Expensive and the Labor Market Too Strong
Mortgage rates vs. consumer prices less food/energy
While we saw some mortgage rate relief over the past few months, thanks to some encouraging economic reports, they are going up again.
You can thank the latest Consumer Price Index (CPI), which came in higher than expected.
The graph above compares Freddie Mac’s 30-Year Fixed Rate Mortgage Average in the United States (source) and Sticky Price Consumer Price Index less Food and Energy, per the Federal Reserve Bank of Atlanta (source).
CPI measures inflation and the most recent report showed consumer prices up 6.4% on an annual basis in January, down slightly from 6.5% in December. It was higher than the 6.2% expected.
Meanwhile, core CPI, which excludes food and energy, increased 0.4% on a monthly basis.
A week earlier, we had a better-than-expected jobs report, which had already put pressure on mortgage rates.
In short, a bunch of “good economic news” rolled in at a time when the Fed is attempting to engineer a near-recession.
That’s not good for mortgage rates. Interest rates tend to come down when the economy is slowing.
But these reports aren’t showing the Fed that the economy is slowing down. If anything, they’ve shown the Fed needs to up the fight.
Why Mortgage Rates Saw a Period of Relief in Late 2022
Mortgage rates experienced a nice little rally from mid-November 2022 to early February 2023.
The driver was some positive CPI reports that showed inflation was slowing. It appeared as if the Fed was getting prices under control.
In fact, it seemed as if the worst was behind us, despite it only being a few months.
But in hindsight, it looks to have been a blip. Or at least not a trend, as I warned at the time. Perhaps it was foolish to think the fight would be so easy.
This is exactly what the Fed has been cautioning us about. Until they see their inflation fight truly won, they’re going to raise rates and keep them elevated.
For a real-world perspective, I just got back from the grocery store. I bought a loaf of basic bread, a bag of chips, and a non-organic tomato. The bill was $14.49.
A year ago, that may have set me back $8. So inflation is real and it’s hitting our wallets on a daily basis.
Until it stops, expect higher mortgage rates. How high remains to be seen.
Will Mortgage Rates Be Even Higher in 2023?
Many thought mortgage rates had peaked in 2022, myself included. But since then we’ve seen a slew of strong economic reports.
Both the CPI report and jobs report defied expectations. And this is doubly scary given the Fed’s aggressive engineering of late.
Even with much interest higher rates, employment remains strong and consumer prices continue to be elevated.
If we see more of these reports, the 30-year fixed could climb back above 7%, and possibly head toward 8%.
Either way, these developments strengthen the argument that mortgage rates will stay higher for longer.
It’s not a foregone conclusion though. These monthly reports are volatile and may reverse course at any time.
So mortgage rates do still have the potential to creep back to recent lows, and move even lower.
The takeaway is that the inflation fight is going to take longer than expected, as the Fed told us.
And that means more defensive pricing on mortgages, aka higher mortgage rates for longer.
While home prices continue to fall on an annual basis, new data from Black Knight indicates that the trend may not continue beyond the short term. The company’s March Mortgage Monitor shows its seasonally adjusted Home Price Index (HPI) rose 0.45 percent in March (the largest increase since last May) and was up 1.38 percent before adjustment. The latter number is roughly on par with the 10-year March average of 1.43 percent, typically the strongest monthly uptick each year. Further, revisions to the January and February HPI numbers show monthly gains of 0.13 percent and 0.43 percent making March the third consecutive month of gains. The company warns that these monthly increases would annualize to gains of more than 10 percent and make it important to watch for further heating in coming months.
Black Knight’s Vice President for Research Strategy, Andy Walden, says, “Despite the home price strengthening of these past couple of months, the backward-looking annual growth rate continued to cool as the influence of the red-hot spring 2022 market fades in the rearview mirror. Prices are now up just 1.0 percent year over year, with the annual growth rate on track to fall to roughly 0 percent by April.” That annual metric has been falling by 1.3-1.4 percent each month since the start of 2023.
The only markets in the top 50 by population where seasonally adjusted prices are still shrinking are Austin, Salt Lake City, and San Antonio. Phoenix and Dallas were effectively flat month-over-month. The largest price gains have occurred in the Midwest and Northeast.
Driving the recent price gains is the inventory shortage that’s been plaguing the housing market for some time. Walden said, “A modest bump in homebuyer demand ran headlong into falling for-sale supply. Just five months ago, prices were declining on a seasonally adjusted month-over-month basis in 92 percent of all major U.S. markets. Fast forward to March, and the situation has done a literal 180, with prices now rising in 92 percent of markets from February.
“Our Collateral Analytics data showed the supply of active listings fell for the sixth straight month, to the lowest level since April 2022. On top of that, March saw deterioration in supply among 90 percent of major markets. New listings aren’t filling the gap either – 30 percent fewer properties hit the market in March as compared to pre-pandemic norms. That deficit has now increased in each of the last six months and is up from -27 percent in February and -25 percent the month before. Given the modest rise in sales volumes, current available inventory represents just 2.6 months of supply on a seasonally adjusted basis, tipping the scale back toward sellers in a tightly constricted market.”
The Monitor said interest rates remained volatile – from a high of 6.85 percent in early March, to 6.21 percent by early April, then back up above 6.5 percent. by the middle of the month. Despite the pullback in rates and that the heart of the home buying season is here, purchase rate locks are 18 percent (unadjusted) from their late March highs. Likewise, refinance volumes are down 17 percent among cash-outs and 24 percent among rate-term refis since mid- to late March. Walden said, “This trend is worth watching closely in coming weeks given the delicate balance of supply and demand in today’s market. Granular, timely data has become ever more essential as the market continues to sift through each new shred of economic news in hopes of predicting how the Federal Reserve and broader economy will react.”
Inflation does not yet appear to be hurting mortgage performance. The national delinquency rate dropped 53 BPS to 2.92 percent in March. This is the first time in Black Knight’s 23-year records that the rate has been below 3 percent. March’s 15.2 percent decrease was broad-based, with 30, 60 and 90-days past due buckets all improving.
The CARES Act’s mortgage protections will expire at the end of May, so Black Knight provided a snapshot of the current status of forbearance plans. Only 422,000 first mortgages remain in plans, down by 22,700 over the course of the month. Just over 200,000 loans remain in loss mitigation. There are 105,000 loans in post-forbearance foreclosure, the majority of which were delinquent pre-pandemic.
The share of borrowers who have trouble making payments after exiting plans appears to have stabilized below 20 percent.
With mortgage rates on long-term fixed-rate mortgages finally slipping into the 3% range, mind you just barely, more fence-sitters may be pondering if they should finally buy a home as opposed to rent.
From a mortgage rate perspective, it’s a no-brainer. Now could be the best time to buy a house…EVER.
Heck, homeownership is starting to look pretty darn attractive with those ultra-low monthly mortgage payments, especially coupled with depressed home prices.
But from a broader economic standpoint, not so much.
The Economy Is Ugly
Things still look bleak, with unemployment expected to remain high for the foreseeable future, and fears of a complete economic collapse still swirling.
An economic outlook released this week by mortgage financier Freddie Mac perhaps said it best:
“With monetary policy expected to keep interest rates low for a while, affordability will remain high for potential homebuyers. In the meantime, many will choose to rent.”
Huh? Affordability will remain high, but many will choose to rent? How does that make sense?
And why are they choosing? If they have a choice, how could they not possibly buy a home right now?
Current Homeowners Banking on Prospective Buyers
If they’re choosing not to buy a home, what about those who currently own a home worth half the balance of their mortgage?
You know, those with deeply underwater mortgages who aren’t quite ready to walk away, who are banking on seeing positive home equity at some point in the next decade.
Pretty scary notion that prospective homeowners who could enter the market in positions significantly better than existing homeowners aren’t willing to.
But the way they see it, it’s scarier to take the plunge and join them, given the economic uncertainty in the air.
After all, it doesn’t make a whole lot of sense to start a family and form a household when you’re not sure if you’ll keep earning what you’re earning, let alone keep your job.
And so that may explain why the low interest rates aren’t causing many to bite, at least not home buyers.
Refinance Share Nearing 80 Percent
Meanwhile, the refinance share of loan applications is in fact rising, and is now near 80 percent, per the Mortgage Bankers Association.
Previous estimates saw the purchase-money mortgage share rising to 50 percent by now…not even close. Just wait until the traditionally slow fall and winter home buying seasons.
On top of those not willing to take the plunge, there are plenty of people out there who can’t even buy a home if they wanted to, thanks to that unemployment issue, along with more stringent mortgage underwriting guidelines in place today.
And roughly 20 percent can’t buy simply because they fudged up their previous mortgage.
Imagine if the loose underwriting that was in place during the boom was still in place…everyone would own a home. But we know that’s a bad idea…
All that said, you’ve got to figure that buying a home right now can’t be all bad. As mentioned earlier, you’d be much better off than those who bought five years ago from a home price, equity and interest rate perspective.
The question is whether you need to hurry up and make the decision. Given the relatively high chance of more bad economic news, along with forecasts of lower home prices in the near future, it may pay to wait and buy next year if you’ve got time.
After all, you may find a lower home price and a similar mortgage rate in six months.
And in the meantime, you can get your finances in order to ensure you will qualify without worry when that right time comes.
Mortgage rates fell. Then mortgage rates rose. Then mortgage rates fell again. What the heck is going on out there? Bank runs, bank failures, no more Fed rate hikes? Itâs called uncertainty, which leads to volatility in everything from stocks to bonds and mortgage rates. So if youâre not sure whatâs going on, join the… Read More »Mortgage Rates Are Very Volatile Right Now. Hereâs What to Watch For
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