Investors evaluating precious metals often ask: gold vs silver, which is better for investors? In this comparison, discover the investment merits of gold’s stability and silver’s industrial relevance, geared towards helping you decide which metal suits your financial strategy. Without leaning towards one or the other, this article presents a balanced view to inform your choice.
Key Takeaways
Gold and silver serve as a store of value and a hedge against inflation, with gold mainly being an investment asset while silver has significant industrial applications, impacting their price volatility and investment suitability.
Gold is revered as a safe haven asset, attracting investment during economic turmoil and serving as an inflation hedge, while silver’s dual role in industry and investment sectors offers growth potential and affordability.
Investors should consider precious metals within a diversified portfolio and can choose between physical metals, ETFs, or mining stocks, each with its own benefits and risks, and should evaluate after-inflation returns and personal financial goals to decide between gold and silver.
Gold and silver, the titans of precious metals, have long served as a reliable store of value and an effective inflation hedge. While gold primarily functions as an investment asset, offering potential for significant returns to those with larger capital, silver boasts an additional industrial role, broadening its appeal. However, investing in these precious metals isn’t as simple as stashing bars or coins in a safe. It involves dealing with price volatility and aligning your investment with long-term goals.
Adopting a buy-and-hold approach may serve investors best over the long term when investing in gold and silver. But why? It’s because the prices of these metals are shaped by a vast array of factors. Geopolitical issues, economic turmoil, and demands in the industrial sector all play a part in the daily dance of gold and silver prices. Understanding these factors can help you make informed decisions about when and how much to invest.
So why consider precious metals as part of your investment portfolio? They offer a unique combination of benefits:
Gold, with its reputation as a safe haven, attracts those looking for stability amidst market chaos
Silver, with its dual role in the industrial and investment sectors, offers an affordable entry point for investors with smaller capital
Both metals provide a robust way to diversify your portfolio and protect against inflation.
Understanding Gold’s Position as a Safe Haven Asset
Gold has long been a symbol of stability and security in the financial world. Its glittering history spans centuries, maintaining its value even in times of economic turmoil. It’s no wonder that in periods of global uncertainty or financial crises, investors often flock to gold, buoying its value and cementing its reputation as a safe haven.
One of gold’s most notable features is its role as an inflation hedge. As the cost of living increases, inflation hedge gold has shown a remarkable ability to preserve the real value of assets. This unique characteristic comes from how gold’s supply growth aligns with long-term global economic growth, helping to maintain its value during inflationary periods. This resilience, coupled with the tendency of investors to shift towards gold as a safe haven during inflation, can drive up its demand and price.
Given these factors, it’s clear why gold holds a revered place in the financial market. Whether you’re looking for a buffer against economic instability or an asset that can protect your buying power in the face of rising prices, gold stands firm as a reliable safe haven asset.
Silver’s Dual Role: Industrial Demand and Investment Segment
While gold may steal the spotlight for its luster and stability, silver plays a shining role of its own. Apart from being an investment asset, silver’s widespread industrial applications can drive up its price and enhance its investment appeal. In 2023, industrial applications reached a new record high, with photovoltaics usage increasing by a staggering 64%. China’s industrial demand for silver surged by 44% in the same year, predominantly driven by growth in green applications such as:
photovoltaics
solar panels
batteries
electronics
medical devices
These industrial applications highlight the versatility and value of both silver and silver bullion coins as an investment.
Due to its significant industrial use and affordable price point, silver is an accessible option for investors with smaller amounts of capital. However, the silver lining has a cloud. During economic downturns, silver’s industrial use can result in a drop in demand and a corresponding price drop. This volatility underscores the need for investors to consider their risk tolerance when investing in silver.
Despite its volatility, the forecast for silver demand in 2024 predicts a growth of 2%, with industrial production expected to achieve new records. This projected growth, along with silver’s role in portfolio diversification and potential for future price appreciation, suggests that silver’s investment appeal may shine brighter in the future.
Including gold and silver in a diversified portfolio can enhance performance during market volatility and inflation. Financial advisors often suggest allocating 5-10% of an investment portfolio to commodities like gold and silver for diversification purposes. The logic is simple: gold offers diversification due to its historically low correlation with other financial assets such as stocks and bonds.
The inclusion of gold and silver, primarily an investment asset class, which unlike an asset produces cash flow, can act as an uncorrelated asset relative to equities, serving to diminish the total volatility of the portfolio.
Some benefits of including silver in your portfolio are:
Silver has significant industrial applications
It is positively correlated with periods of economic growth
Anticipated growth in areas such as renewable energy and artificial intelligence suggests an expanding demand for silver.
However, it’s crucial for investors to consider the following factors when determining the fit of precious metals within their investment strategies:
Potential costs for secure storage of precious metals
The speculative nature of precious metals
Due diligence and careful consideration of your financial circumstances
As with any investment decision, due diligence and careful consideration of your financial circumstances are key, including addressing portfolio risk management requirements.
While investing in physical precious metals has its appeal, precious metal mining stocks offer an intriguing alternative. Gold stocks provide a leveraged play that can outperform physical gold when prices rise, offering substantial potential for capital gains. The reason? Mining stocks do not just reflect the value of the precious metal. They also include the prospects of mining companies themselves.
Compared to physical gold, gold stocks offer several advantages:
They are more liquid and can be easily bought and sold.
They can provide additional income through dividends paid by established, profitable mining companies.
Investors can benefit from the expansion of mining operations and reap profits from significant new gold discoveries.
These advantages make gold stocks an enticing option for those looking to diversify their portfolio.
Moreover, by choosing gold mining stocks, investors can avoid the extra costs associated with the storage and security of physical gold. This can make gold stocks a more convenient and cost-effective alternative for investors who want exposure to gold without the logistical challenges of owning physical metal.
Physical Bullion vs. ETFs: Choosing Your Investment Vehicle
When considering precious metals as part of your investment strategy, it’s essential to explore all available options. Physical bullion and exchange-traded funds (ETFs) present two distinct investment vehicles, each with its own set of advantages and challenges. Gold ETFs, for instance, offer enhanced liquidity compared to physical gold, allowing investors to quickly buy and sell shares without facing the logistical challenges tied to physical transactions of gold.
Investing in gold ETFs can also be more cost-effective over time. Investors do not have to deal with the costs of purchasing and maintaining physical gold, and the responsibilities of securing and insuring the physical gold are professionally managed by the fund. However, it’s crucial to remember that the value of shares in gold ETFs may not track the price of gold precisely, as the fund’s expenses could slightly erode the value of these shares over time.
On the other hand, investing in physical gold comes with its own set of considerations. Apart from the allure of owning a tangible asset, investors must account for costs such as storage fees, insurance, and potentially higher dealer premiums over the market price. Additionally, purchasing physical gold requires vigilance due to the risks of scams, necessitating transactions with reputable dealers and possible appraisal costs, which add to the overall investment expense.
Evaluating After-Inflation Returns: Gold vs. Silver
When it comes to returns, it’s crucial to look beyond the nominal figures and consider the real value – the after-inflation returns. And in this regard, the performance of gold and silver may not be as glittering as one might expect. However, these precious metals have historically provided a hedge against inflation, offering returns that outpace inflation over certain periods. Here are some key points to consider:
Gold and silver can serve as a portfolio diversifier, helping to reduce risk.
Silver, due to its abundance, may have less upside potential compared to gold.
Both gold and silver have historically provided a hedge against inflation.
While the after-inflation returns of gold and silver may not always be stellar, considering past investment product performance, they can still play a valuable role in a well-diversified investment portfolio, remaining steady amid inflation uncertainties.
Gold tends to perform well during economic downturns and protections against inflation; studies confirm a positive correlation between the rising cost of living and the value of both precious metals. This ability to preserve wealth becomes particularly valuable during periods of high inflation, increasing their attractiveness as part of an investment strategy.
While the after-inflation returns for gold and silver may not be highly impressive when compared to other investments, rising inflation typically enhances their attractiveness as part of an investment strategy. This context underscores the importance of considering multiple factors – including inflation, market conditions, and personal financial goals – when evaluating the potential returns on your investment in gold and silver.
Making the Decision: Should You Buy Gold or Silver?
So, armed with all this knowledge, how do you decide between gold and silver? The answer isn’t one-size-fits-all. Investors should assess their individual financial circumstances and objectives when considering gold or silver investments, as the suitability can greatly vary depending on personal financial situations and goals.
The choice between gold or silver as a better investment option hinges largely on the individual’s risk tolerance and comfort with each investment strategy. It’s crucial to remember that while both precious metals can serve as hedges against inflation and economic downturns, they also present unique risks and opportunities. For instance, gold’s role as a safe haven asset may appeal to those seeking stability, while silver’s industrial applications and lower price point could attract investors looking for growth and affordability.
Before making the final call, it’s advisable to seek the guidance of a financial advisor to evaluate the appropriateness of gold or silver investments for your portfolio. Additionally, conducting independent research into gold and silver investment strategies can help you make a well-informed decision. Armed with knowledge and guided by your financial goals, you are well-equipped to make the golden (or silver) choice that’s right for you.
Summary
When it comes to precious metals, gold and silver stand as powerful contenders. Their unique characteristics offer distinct advantages for investors, making them an appealing inclusion in a diversified portfolio. Gold, with its safe-haven status, serves as a buffer against economic instability, while silver, with its industrial applications and affordable price, presents growth opportunities and accessibility to investors.
Ultimately, the decision to invest in gold, silver, precious metal mining stocks, or any other asset class should be guided by a thorough understanding of your financial goals, risk tolerance, and market conditions. It’s not about choosing the shiniest option, but the one that aligns best with your investment strategy and financial aspirations. So, whether you’re drawn to the allure of gold or the versatility of silver, remember – knowledge is the most precious asset of all.
Frequently Asked Questions
What factors influence the price of gold and silver?
The prices of gold and silver are influenced by various factors, including global economic stability, inflation rates, currency values, interest rates, and mining supply. Geopolitical events and investor sentiment can also cause significant price fluctuations.
Can I invest in gold and silver without owning physical metals?
Yes, investors can gain exposure to gold and silver without owning physical metals by investing in exchange-traded funds (ETFs), mining stocks, or mutual funds that focus on precious metals.
How does the industrial demand for silver affect its investment value?
The industrial demand for silver, particularly in technology and renewable energy sectors, can significantly affect its investment value. As demand for industrial applications rises, the price of silver may increase, potentially offering capital gains to investors.
What risks are associated with investing in precious metals?
Investing in precious metals carries risks such as market volatility, liquidity issues, and potential losses if prices decline. Additionally, physical metal investments may incur costs for storage and insurance.
Are there any tax considerations when investing in gold and silver?
Yes, there are tax considerations when investing in gold and silver. Capital gains on precious metals may be subject to taxation, and the tax treatment may differ depending on the investment vehicle (e.g., physical metals, ETFs, stocks). A tax professional can help you with this.
How do geopolitical events impact gold and silver prices?
Geopolitical events can have a significant impact on gold and silver prices. Uncertainty and instability often lead investors to seek safe-haven assets like gold, which can drive up prices. Conversely, positive geopolitical developments can reduce demand for safe havens, potentially lowering prices.
What is the best way to track the prices of gold and silver?
Investors can track the prices of gold and silver through financial news websites, commodity exchanges, and market data services. Many investment platforms also provide real-time pricing information for precious metals.
How do central bank policies affect gold and silver investments?
Central bank policies, such as interest rate adjustments and quantitative easing, can affect the value of currencies and influence investor sentiment towards precious metals. Policies that lead to currency devaluation can increase the attractiveness of gold and silver as a store of value.
Colorado Springs is renowned for its natural beauty, laid back lifestyle, and friendly community. Living in Colorado Springs means experiencing the beauty of all four seasons, from snowy winters perfect for skiing and snowboarding, to warm summers ideal for camping and fishing. So, if you’ve been asking yourself, “Should I move to Colorado Springs, CO?” you’re in the right place. In this article, we’ll dive into the pros and cons of making Colorado Springs your home to help you decide if it’s the right fit for you. Let’s get started.
Colorado Springs at a Glance
Walk Score: 36 | Bike Score: 45| Transit Score: 19
Median Sale Price: $440,000 | Average Rent for 1-Bedroom Apartment: $1,520
Colorado Springs neighborhoods | Houses for rent in Colorado Springs | apartments for rent in Colorado Springs | Homes for sale in Colorado Springs
Pro: Thriving arts and cultural scene
Colorado Springs is home to a vibrant arts and cultural scene. The city has numerous galleries, theaters, and museums that celebrate both local and international talent. The Colorado Springs Fine Arts Center and the Pikes Peak Center for the Performing Arts are just two examples of venues that offer a diverse array of performances and exhibitions.
Con: Variable weather conditions
The weather in Colorado Springs can be unpredictable, with sudden changes that can catch residents off guard. While the city enjoys over 300 days of sunshine a year, it also experiences its share of snow, hail, and rapid temperature fluctuations. This variability can make planning outdoor activities challenging and requires residents to be prepared for anything. The winter months, in particular, can see heavy snowfall, impacting travel and daily life.
Pro: Stunning natural beauty
Colorado Springs is located at the foot of the majestic Pikes Peak, offering breathtaking views that are hard to find elsewhere. The city is surrounded by natural wonders, including the Garden of the Gods with its iconic red rock formations. Residents enjoy easy access to hiking, biking, and outdoor adventures right in their backyard. This connection to nature enhances the quality of life for those who live here, making it a coveted location for nature lovers.
Con: High altitude
Located at an elevation of over 6,000 feet, Colorado Springs’ high altitude can be a challenge for new residents and visitors. The thin air can sometimes lead to altitude sickness, affecting one’s energy levels and overall health. It often takes time to acclimate to the elevation, which can be particularly tough for those moving from lower altitudes. This aspect can impact athletic performance and daily activities until one’s body adjusts.
Pro: Growing economy
Colorado Springs has a growing economy, with a focus on the aerospace and defense industries, technology, and tourism. This economic growth has led to an increase in job opportunities, attracting individuals from various career fields. The city’s economic development is supported by a proactive local government and a community that values innovation and entrepreneurship.
Con: Rising cost of living
The cost of living in Colorado Springs is on the rise since becoming more popular. In fact, the cost of living in Colorado Springs is 8% higher than the national average. Real estate prices have increased, making it more challenging for some first-time homebuyers and renters. While still more affordable than some major cities, the trend towards higher living costs could pose a problem for those on a tight budget or looking to move to the area.
Pro: Pet-friendly city
Colorado Springs is an incredibly pet-friendly city, with numerous parks, trails, and open spaces where pets are welcome. Many restaurants and businesses also cater to pet owners, allowing dogs in outdoor areas. This pet-friendly attitude is evident in the city’s numerous dog parks and pet events, including the Colorado Springs Pet Expo. The city’s devotion to pets makes it a great place for anyone who loves animals to call home.
Con: Limited nightlife
Compared to larger cities, Colorado Springs has a more subdued nightlife. While there are certainly bars, restaurants, and events to enjoy, those seeking a vibrant club scene might find the options limited. This quieter nightlife aligns with the city’s overall laid-back atmosphere but may be a drawback for those who prefer a bustling night out on the town.
The sense of community in Colorado Springs is strong, with friendly neighborhoods and an array of community events throughout the year. From local farmers’ markets to festivals celebrating the city’s culture and history, there’s a genuine camaraderie among locals. This community spirit makes it easy for newcomers to feel welcome and quickly become part of the city’s social fabric.
Jenna is a Midwest native who enjoys writing about home improvement projects and local insights. When she’s not working, you can find her cooking, crocheting, or backpacking with her fiancé.
Sales of newly built single-family homes in the United States soared in March despite mortgage rates remaining elevated that month.
New home sales, which make up about 10% of the market, jumped 8.8% last month to a seasonally adjusted annual rate of 693,000, according to government figures released Tuesday. That trounced the 670,000 rate projected by economists, according to a FactSet poll, and was the strongest monthly increase since December 2022.
Sales of new homes increased across the country last month, rising the most in the Northeast region by a robust 27.8% from February.
Meanwhile, sales of existing homes, which make up the vast majority of the housing market, fell 4.3% in March to a seasonally adjusted annual rate of 4.19 million, the sharpest drop in more than a year, the National Association of Realtors reported last week.
Housing market poised to remain difficult
The broader US housing market is expected to remain tough for Americans, with mortgage rates poised to stay well above 6% this year, economists say. The Federal Reserve doesn’t directly set mortgage rates, but its actions do influence them, and the central bank isn’t expected to cut interest rates anytime soon. A persistent undersupply of housing also remains a key pressure point in the market, contributing to low affordability.
Housing inventory has improved in recent months, but supply still isn’t keeping up with demand. This means homebuyers have limited options as some homeowners who locked in a low mortgage rate before the Fed began to hike rates in 2022 largely prefer to not sell their homes.
“Despite high prices and mortgage rates, homebuyers have limited options on the resale market, although resale inventories have improved some over the course of this year,” Gregg Logan, managing director at RCLCO Real Estate Consulting, said in a note Tuesday.
“The willingness of the major homebuilders to utilize incentives such as price reductions, mortgage rate buy-downs and paying buyers closings costs continue to support a healthy pace of new home sales,” he added.
A stalled housing market recovery?
The housing market began the year with some momentum as home sales surged, homebuilder sentiment perked up and inventory levels climbed, but now it seems to have fizzled out.
In addition to the March drop in existing home sales, residential construction of single-family homes also fell that month, declining 12.4% to a seasonally adjusted annual rate of 1.022 million units, according to Commerce Department data released earlier this month. Residential construction fell throughout the country except in the West. Meanwhile, building permits for future construction tumbled 3.7% in March to a five-month low.
Data from the National Association of Home Builders showed that 22% of builders cut homes prices in April, down from 24% in March. Meanwhile, the share of builders who offered a sales incentive edged lower to 57% in April from 60% in March. Sentiment among homebuilders in America held steady in April, NAHB said.
“April’s flat reading suggests potential for demand growth is there, but buyers are hesitating until they can better gauge where interest rates are headed,” NAHB’s chief economist, Robert Dietz, said in a release.
This story has been updated with additional context.
Living with family members can be both a comforting and challenging experience, especially when those family members happen to be siblings. As adults, the dynamics change, and considerations extend beyond just familial bonds. When siblings decide to live together and potentially invest jointly, a unique set of opportunities and obstacles arise. Let’s delve into the pros and cons of such an arrangement.
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Pros
Shared Financial Responsibilities: Pooling resources with siblings can ease the burden of financial responsibilities. Whether it’s splitting rent, utilities, or groceries, dividing costs can lead to significant savings for all parties involved.
Greater Purchasing Power: When siblings join forces to invest, they can leverage their combined financial resources to access opportunities that might be out of reach individually. This could include purchasing a larger property, investing in stocks, or starting a business together.
Built-In Support System: Living with siblings means having a built-in support system readily available. Whether it’s help with chores, emotional support during tough times, or simply having someone to share a meal with, the presence of siblings can provide a sense of comfort and security.
Shared Goals and Values: Siblings often share similar upbringings, values, and life goals, which can facilitate smoother decision-making processes when it comes to investments and lifestyle choices. Aligning on common objectives can lead to a more cohesive living and investing experience.
Potential for Long-Term Wealth Building: By combining resources and investing strategically, siblings can work towards building long-term wealth for themselves and future generations. Real estate investments, for example, can appreciate over time, providing a valuable asset for the family.
Cons
Conflict and Tension: Living with siblings can sometimes lead to conflicts over finances, household responsibilities, or personal space. Differing lifestyles and personalities may clash, potentially causing tension within the household and complicating investment decisions.
Dependency Issues: Dependence on siblings for financial support or decision-making can hinder individual autonomy and personal growth. It’s essential to strike a balance between mutual support and independence to avoid feelings of resentment or overreliance.
Risk of Financial Disputes: Entering into joint investments with siblings carries the risk of financial disputes and disagreements. Differences in risk tolerance, investment preferences, or future plans may lead to conflicts regarding asset management and distribution of profits.
Limited Privacy: Sharing a living space with siblings means sacrificing some level of privacy. While it can foster closeness and bonding, it may also restrict personal freedom and make it challenging to carve out individual spaces within the home.
Uncertain Future Dynamics: Life is unpredictable, and circumstances can change over time. Siblings may experience shifts in career paths, relationships, or financial situations that impact their living arrangements and investment plans. Anticipating and adapting to these changes requires open communication and flexibility.
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LOS ANGELES (AP) — Prospective homebuyers are facing higher costs to finance a home with the average long-term U.S. mortgage rate moving above 7% this week to its highest level in nearly five months.
The average rate on a 30-year mortgage rose to 7.1% from 6.88% last week, mortgage buyer Freddie Mac said Thursday. A year ago, the rate averaged 6.39%.
When mortgage rates rise, they can add hundreds of dollars a month in costs for borrowers, limiting how much they can afford at a time when the U.S. housing market remains constrained by relatively few homes for sale and rising home prices.
“As rates trend higher, potential homebuyers are deciding whether to buy before rates rise even more or hold off in hopes of decreases later in the year,” said Sam Khater, Freddie Mac’s chief economist. “Last week, purchase applications rose modestly, but it remains unclear how many homebuyers can withstand increasing rates in the future.”
AP business correspondent Alex Veiga reports mortgage rates reaching their highest level in months.
After climbing to a 23-year high of 7.79% in October, the average rate on a 30-year mortgage had remained below 7% since early December amid expectations that inflation would ease enough this year for the Federal Reserve to begin cutting its short-term interest rate.
Mortgage rates are influenced by several factors, including how the bond market reacts to the Fed’s interest rate policy and the moves in the 10-year Treasury yield, which lenders use as a guide to pricing home loans.
But home loan rates have been mostly drifting higher in recent weeks as stronger-than-expected reports on employment and inflation have stoked doubts over how soon the Fed might decide to start lowering its benchmark interest rate. The uncertainty has pushed up bond yields.
The yield on the 10-year Treasury jumped to around 4.66% on Tuesday — its highest level since early November — after top officials at the Federal Reserve suggested the central bank may hold its main interest steady for a while. The Fed wants to get more confidence that inflation is sustainably heading toward its target of 2%.
The yield was at 4.64% at midday Thursday after new data on applications for unemployment benefits and a report showing manufacturing growth in the mid-Atlantic region pointed to a stronger-than-expected U.S. economy.
“With no cuts to the federal funds rate imminent and with the economy still strong, there is no reason to see downward pressure on mortgage rates right now,” said Lisa Sturtevant, chief economist at Bright MLS. “It seems increasingly likely that mortgage rates are not going to come down any time soon.”
Sturtevant said it’s likely the average rate on a 30-year mortgage will hold close to 7% throughout the spring before easing to the mid-to-high 6% range into the summer.
Other economists also expect that mortgage rates will ease moderately later this year, with forecasts generally calling for the average rate to remain above 6%.
Mortgage rates have now risen three weeks in a row, a setback for home shoppers this spring homebuying season, traditionally the housing market’s busiest time of the year.
Sales of previously occupied U.S. homes fell last month as home shoppers contended with elevated mortgage rates and rising prices.
While easing mortgage rates helped push home sales higher in January and February, the average rate on a 30-year mortgage remains well above 5.1%, where was just two years ago.
That large gap between rates now and then has helped limit the number of previously occupied homes on the market because many homeowners who bought or refinanced more than two years ago are reluctant to sell and give up their fixed-rate mortgages below 3% or 4%.
Meanwhile, the cost of refinancing a home loan also got pricier this week. Borrowing costs on 15-year fixed-rate mortgages, often used to refinance longer-term mortgages, rose this week, pushing the average rate to 6.39% from 6.16% last week. A year ago it averaged 5.76%, Freddie Mac said.
Pennymac Financial Services earned a profit of $39.3 million in the first quarter of 2024, the California-based multichannel lender and servicer announced Wednesday.
The company’s pretax gain in the first quarter was $43.9 million. That was less than the $38.1 million figure it posted during the same period last year but a significant improvement from the pretax loss of $54.2 million it incurred in fourth-quarter 2023.
“PennyMac Financial reported strong operating earnings in the first quarter, with an annualized operating return on equity of 15 percent in what is expected to be the one of the smallest quarterly origination markets of this cycle,” chairman and CEO David Spector said in a news release. “Strong volume increases in our consumer and broker direct channels drove continued profitability in our production segment.”
The company’s loan production pretax income was $35.9 million during the first quarter, down from $39.4 million in Q4 2023 but up from a pretax loss of $19.6 million in Q1 2023. Production revenue totaled $184.7 million, up 5% from the prior quarter and up 52% year over year.
Pennymac reported that the quarterly increase in production revenue was primarily tied to higher net gains on loans held for sale at fair value due to higher volumes in its direct-to-consumer channel. Meanwhile, the revenue growth compared to Q1 2023 was largely due to higher overall origination volumes and margins.
The total value of its loan acquisitions and originations dropped to $21.7 billion in unpaid principal balance (UPB), down 19% on a quarterly basis and 5% below year-ago levels.
During an earnings call on Wednesday, chief financial officer Daniel Perotti said that “Pennymac maintained its dominant position in correspondent lending in the first quarter” as it acquired $18 billion in volume. That was down from $24 billion in the prior quarter and was “driven by our focus on profitability over volatility,” he said.
In the wholesale channel, Perotti noted that locked loans were up 20% and funded loans were “essentially unchanged” from the prior quarter. But broker-channel margins grew from 79 basis points to 103 basis points during that period.
“The number of brokers approved to do business with us at quarter end was over 4,000 — up 36% from the same time last year,” Perotti said. “And we expect this number to continue growing as top brokers increasingly look for a strong second option.”
Pennymac’s servicing portfolio continues to grow. Its owned mortgage servicing rights (MSR) portfolio had a UPB of $386.6 billion on March 31, up 3% from the end of Q4 2023 and up 18% from the end of Q1 2023.
In response to an analyst’s question during the earnings call, Spector said he expects the company’s servicing channel to lead to more refinance opportunities when mortgage rates eventually decline.
“We have built a really great model in terms of growing the servicing portfolio as a byproduct of our organic growth strategy,” Spector said. “And as we continue to lead in the correspondent space and continue to grow our presence in the broker-direct space, I expect that our servicing will continue to grow at probably even a little faster clip. … I don’t see a melting ice cube scenario anytime in the future.”
Last year, Pennymac earned net income of $144.7 million, a decline of nearly 70% from the $475.5 million profit it posted in 2022. And in fourth-quarter 2023 alone, the company lost $36.8 million.
Its net revenues shrank from $2 billion in 2022 to $1.4 billion in 2023. Its overall profit was largely due to the strong performance of its servicing portfolio.
Legal troubles with Black Knight contributed to the loss in Q4 2023. Late in the year, an arbitrator awarded Black Knight $155.2 million in damages tied to a breach of contract claim in a four-year dispute involving the companies. Black Knight accused Pennymac of copying its mortgage servicing platform.
At the close of the market on Wednesday, Pennymac’s stock price was $92.07, up 4.86% since the start of the year.
“Compared to years in the past, new home sales still aren’t performing as well as necessary to help reduce the high demand for new homes in the near term,” Hepp said. At the end of March, there were an estimated 477,000 new homes remaining for sale, representing an 8.3-month supply at the current sales rate. … [Read more…]
Lloyds profits fall as competition for mortgages heats up
Pre-tax profits drop to £1.6bn between January and March, down from £2.3bn last year
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Lloyds Banking Group has suffered a 28% drop in first-quarter profits amid tough competition for mortgages and savings, but bosses said they expected those pressures to soon ease, helped by an improving UK economy.
The country’s largest mortgage lender, which also owns the Halifax brand, said pre-tax profits dropped to £1.6bn between January and March, having fallen from £2.3bn last year when rising interest rates boosted the lender’s profits by almost 50%.
The bank’s chief financial officer, William Chalmers, said this reflected “keen pricing in the mortgage markets, and savings moving into higher rate accounts”. Competition and jitters in the mortgage market led to a drop in its total outstanding loan book.
It resulted in a 10% drop in net interest income, which accounts for the difference in loan charges versus what is paid out to savers, to £3.2bn in the three months to March.
Pressure from politicians and regulators to pass on interest rates to savers at the same rate they had been raising mortgage and loan charges has squeezed income for major mortgage providers such as Lloyds in recent months.
In response, banks have had to compete harder for customer deposits by offering more substantial returns, particularly on fixed savings products where consumers lock away cash for longer. It attracted £1.3bn in regular customer deposits but that failed to make up for the £3.5bn pulled by business clients.
However, Chalmers said these savings and mortgage pressures were likely to “ease through 2024”, as economic conditions continued to improve.
House prices, which Lloyds previously expected to fall by 2.2% in 2024, are forecast to rise by 1.5% by the end of the year.
The banking group, often seen as a bellwether for the UK economy, is also forecasting a steady improvement in economic growth, at a rate of 0.3% in most quarters and a drop in inflation to 2.4% – from 3.2% in March – resulting in a fall in interest rates to 4.5% by December. It expects the Bank of England to cut rates three times in 2024, starting in the middle of the year.
Chalmers said mortgage applications had already soared by 20% in the first quarter, which could translate into new home loans, and reverse some of its loan book losses. That partly reflected the group’s willingness to offer better interest rates in order to boost lending.
“We’re really pleased to see the pickup in applications, and development of our market share, in that respect. And I think that represents what is a series of competitive offers out there in the market, suiting our customer needs. We’d hope to maintain that ambition over the course of the year,” Chalmers said.
Overall, the banking boss said he expected the UK mortgage market to pick up by 5% by the end of 2024. “We’d hope to play a major part in it,” Chalmers added.
The improved economic outlook meant the bank was more confident that customers could repay their loans. Despite the cost of living crisis and higher mortgage repayments, which have weighed on borrowers, Lloyds set aside £57m for potential defaults, compared with £243m last year.
The Lloyds chief executive, Charlie Nunn, said: “The group is continuing to deliver in line with expectations in the first quarter of 2024, with solid net income, cost discipline and strong asset quality. Our performance provides us with further confidence around our strategic ambitions and 2024 and 2026 guidance.”
Investors had also been hoping for updates on the Financial Conduct Authority investigation into whether consumers have been charged inflated prices for car loans. Lloyds, which has the largest car loan division of the four biggest UK banks, has already put aside £450m – far short of the £2bn that analysts believe it could be on the hook for.
However, Lloyds did not give any more details about whether it might put aside more cash to cover potential fines or compensation for customers. The FCA has indicated that it will give more details on its findings by the autumn.
Bunny Williams believes she was born to design. The celebrated decorator, author and furnishings designer said she thinks some enter the world with an innate ability to distinguish what looks good and what does not. But she warned that it takes more than having an eye to be successful in design.
“I do think we are born with an eye. All of us in this field, we see, we take in things, but it’s how we train that eye that I think is important,” she told an audience of fellow designers at the recent High Point Market in North Carolina. “When I was writing this book, I was looking back and thinking of how I got started and how important education is, and you educate yourself over and over again.”
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That book is “Life in the Garden,” a new coffee table tome filled with photos of the lush gardens surrounding Williams’ Connecticut home. She purchased the house and grounds — which were fairly rundown and overgrown — more than 40 years ago. In the years since, she and her husband, antiques dealer John Rosselli, have brought the home and garden back to flourishing life.
“I think one of the reasons I wanted to buy a house is I wanted a garden,” Williams said. “I was living in an apartment in New York, but I’d grown up in the country, and I wanted to get back to the country.”
Williams was raised on a farm in Charlottesville, Va., where she rode horses and developed an appreciation not only for the land, but also stately Southern homes.
“We lived in the country, but my mother and father both loved houses and loved gardens, and they took me constantly on tours,” she said.
Perhaps most memorable of those tours was a trip to The Greenbrier resort in West Virginia when Williams was a teen. As she wandered the newly opened hotel, the decor and furnishings unlocked an unexpected passion for design.
“The famous American decorator Dorothy Draper had decorated the hotel, and I went into this amazing place with these bright colors,” she said. “My family was fairly conservative, so frankly, I’d never seen anything like this in my life. And I loved every inch of it.”
The bold use of color and variety that epitomizes Draper’s Greenbrier design scheme reoccurs in the gardens in Williams’ book. Set against the verdant greens of all manner of grasses, stately boxwoods, delicate ferns and curling ivy, the deep crimson of poppies, bubblegum pink snapdragons, golden sunflowers and purple orchids create a tapestry of color that changes with the season.
Just as with her interiors projects and furnishings collections, Williams drew inspiration from her travels to help shape her gardens.
“John and I would go to France [and] to Italy, and we would not only go shopping, but we’d go look at gardens,” she said. “I went to gardens in Normandy. Obviously you go to Sissinghurst, the most extraordinary garden, I think, in the world. And you realize that these gardens had a plan. They were beautifully laid out. All I was interested in were the plants, but I realized that my garden needed structure.”
Williams outlines the structure of her gardens in the book, from the primly laid out parterre garden to the wild, unfettered growth of native plants in the woodland one. And she explains that just as in an interior room, a garden needs differentiation in height and spacing.
“And in a garden, just like in your house, you’ve got to go from one room to another. You have hallways, you have doors, there’s a flow.”
Williams collects gardening accoutrements, storing and displaying them in outbuildings such as her greenhouse and potting shed.
“I love old watering cans,” she said. “I’m always buying baskets, rakes, tools. I just think they look so beautiful. When I see wonderful terracotta pots, mossy terracotta pots, I can’t resist them. But we do use them.”
Williams brings elements of the outdoors inside as well. Tablescapes get a lively boost from centerpieces crafted with colorful vegetables from the garden. Single sunflowers in a bud vase add interest to the mantle, and during the holidays, Williams drapes her interiors in evergreens grown specifically for decorative use.
“Whether it’s coleus in urns or morning glories growing in a terracotta pot, all these things add so much to a garden and a property and a house,” she said.
Along with her book, Williams introduced new designs from her Bunny Williams Home collection with Wesley Hall at High Point Market. The line includes an assortment of seating and dining options, as well as beds and accent tables, which Williams said inspired the launch of the partnership with Wesley Hall.
“I couldn’t find enough drink tables,” she says. “I can’t stand sitting in a chair and not having a place to put my water or my bourbon or whatever. And so every time there’s a chair, I want a little table next to it. And I couldn’t find enough. So I started designing them.”
Have you been asking yourself, “Should I move to Tampa, FL?” From the thrilling rides at Busch Gardens to the serene walks along the Tampa Riverwalk, this city offers an exciting mix of excitement and relaxation. Whether you’re a fan of the arts, sports, or just looking for a sunny place to call home, Tampa’s diverse attractions and welcoming atmosphere make it a standout city. In this article, we’ll dive into the pros and cons of living in Tampa to help you figure out if it’s the right fit for you. Let’s get started.
Tampa at a Glance
Walk Score: 86 | Bike Score: 69 | Transit Score: 62
Median Sale Price: $424,000 | Average Rent for 1-Bedroom Apartment: $1,740
Tampa neighborhoods | Houses for rent in Tampa | apartments for rent in Tampa | Homes for sale in Tampa
Pro: Access to beautiful beaches
Tampa’s proximity to some of Florida’s most beautiful beaches is a major draw. Clearwater Beach and St. Pete Beach are both just a short drive away. They offer stunning white sand and crystal-clear waters ideal for swimming, sunbathing, and water sports. These beaches are not only perfect for leisurely days but also provide picturesque sunsets that are truly unforgettable.
Con: Humidity and heat
Living in Tampa means dealing with high humidity and heat, especially during the summer months. It’s not uncommon for temperatures to soar into the 90s. The climate can be challenging for those not accustomed to the Gulf Coast weather. This intense heat can limit outdoor activities during peak times and may lead to higher electricity bills due to the constant need for air conditioning. For some, this weather is a significant drawback of residing in Tampa.
Pro: Outdoor recreation and activities
Tampa offers an abundance of outdoor activities and recreation options, thanks to its warm climate and natural surroundings. From kayaking on the Hillsborough River to biking along the Bayshore Boulevard, the longest continuous sidewalk in the U.S., there’s no shortage of ways to enjoy the outdoors. The city also boasts numerous parks and green spaces, such as Lettuce Lake Park. These spaces provide locals with ample opportunities for leisure and exercise.
Con: Risk of hurricanes
Located on the Gulf Coast, Tampa is susceptible to hurricanes and tropical storms, particularly during hurricane season from June to November. In fact, Tampa ranks second in the top 10 U.S. metros with the highest risk of hurricane winds. These natural disasters can cause significant damage and disrupt life for weeks or even months. Residents must be prepared for evacuation orders and have plans in place for securing their homes. The threat of hurricanes is a serious consideration for anyone thinking of moving to Tampa.
Pro: Thriving job market
The job market in Tampa is robust, with opportunities in the finance, healthcare, technology, and tourism industries. Companies like Raymond James and WellCare provide significant employment opportunities, contributing to the city’s economic growth. Tampa’s focus on innovation and business development makes it an attractive place for people looking to advance their careers or individuals looking to start new business ventures.
Con: Somewhat limited public transportation options
While Tampa has made strides in improving its public transportation system, options remain limited compared to other major cities. With a Transit Score of 62, the reliance on cars is high. There are bus services and a streetcar system in certain areas, however, the coverage is not extensive. This limitation can be a hurdle for those without personal vehicles or those who prefer to use public transit for environmental or financial reasons.
Pro: Sports and entertainment hub
Tampa is a haven for sports enthusiasts, home to professional teams like the Tampa Bay Buccaneers (NFL), Tampa Bay Lightning (NHL), and Tampa Bay Rays (MLB). The city rallies around its teams, creating a vibrant sports culture with year-round events and games. Beyond sports, Tampa hosts concerts, Broadway shows, and festivals at venues like the Amalie Arena and the Straz Center, ensuring there’s always something exciting happening.
Con: Rising cost of living
While the cost of living in Tampa is still 4% lower than the national average, living expenses has been on the rise. Tampa has been growing in popularity causing real estate prices and rents to increase year-over-year. This can make it challenging for some residents to find affordable housing. While expenses are still lower than some major US cities, the trend towards higher living costs is a concern for those moving to the area or looking to buy property.
Pro: Excellent cultural scene
From the historic Ybor City, known for its Cuban and Spanish roots, to the Tampa Museum of Art, Tampa is a hub for cultural exploration. The Gasparilla Pirate Festival, an annual event that captivates the city with parades and festivities, is a testament to Tampa’s unique local culture. This vibrant cultural scene provides an engaging lifestyle for those who appreciate art, history, and community events.
Con: Summer crowds
With its beautiful beaches and tourist attractions, Tampa becomes a hotspot for visitors during the summer months. While tourism boosts the local economy, it can also lead to overcrowded beaches, parks, and attractions, impacting residents’ enjoyment of these spaces. Planning ahead and seeking out less crowded times or places is often necessary to avoid the influx of summer crowds.
Pro: Diverse culinary scene
Tampa’s culinary scene is as diverse as its population, offering a wide range of dining options that reflect the city’s cultural mix. From authentic Cuban sandwiches in Ybor City to fresh seafood along the Gulf Coast, the food landscape in Tampa is a foodie’s delight. The city also hosts numerous food festivals throughout the year, celebrating everything from craft beer to gourmet cuisine, making it an exciting place for culinary exploration.
Jenna is a Midwest native who enjoys writing about home improvement projects and local insights. When she’s not working, you can find her cooking, crocheting, or backpacking with her fiancé.