Americans watching cable news might have been cheered when they saw the latest jobs report: the United States added 303,000 new nonfarm jobs in March and unemployment fell to 3.8%. Both numbers exceeded expectations.
But viewers who are also shopping for a mortgage may have had a different reaction. Economics and housing experts say less unemployment means more pressure on Federal Reserve Chair Jerome Powell to keep interest rates high. And the result has been an uptick in rates.
Powell has made it clear his priority is getting inflation under control. His target number for rising prices is a 2% annual rate. Instead, prices have been rising nearly twice that fast, and the inflation rate has been higher than expected…
Americans are making sacrifices ranging from fewer vacations to skipping meals to afford housing costs.
Just under 50% of U.S. homeowners and renters say they regularly or greatly struggle to make their housing payments, and many are giving up other things to pay in full, according to a new survey from Redfin.
Of the 3,000 American homeowners and renters surveyed, a third of respondents said they are taking fewer or no vacations in order to make their payments, the most common response by far. But others are forced to take more serious action.
An equal share of others said they skipped meals, worked extra hours at their job, or sold belongings (approximately 20% for each category.)
One of every six…
By KIMBERLEY HAAS
In a move that was not surprising, members of the Federal Open Market Committee held the target range for the federal funds rate steady at 5.25% to 5.5% at their meeting this week.
Inflation has eased over the past year but committee members do not believe it will be appropriate to reduce rates until they have gained more confidence inflation is moving sustainably toward 2%, which has been their goal.
Federal Reserve Chair Jerome Powell said during a press conference on Wednesday afternoon that inflation may not reach 2% until 2026 but it is likely rates have hit their peak and the committee plans to start dialing them back at some point this year.
Powell did not…
By PATRICK LAVERY
Kicking the can down the road, moving the goalposts – whatever idiom you want to use – such an expression will likely be appropriate for this week’s meeting of the Federal Open Market Committee, which appears poised to hold the target range for the federal funds rate steady at 5.25% to 5.5%.
While that margin has not been raised since last summer, there has been hope that at some point in 2024, Federal Reserve Board chairman Jerome Powell will come to the microphone at the conclusion of one of the FOMC’s two-day summits and announce the beginning of a rollback of the series of rate hikes that steadily climbed from near-zero in early 2022 to their current…
Mortgage rates broke a month-long upward streak, deflating for the first time in weeks and resulting in a purchase demand boost.
Officials at Freddie Mac reported Thursday that the 30-year fixed-rate mortgage averaged 6.88%, down from the week prior’s 6.94%. A year ago at this time, the 30-year FRM averaged 6.73%. This is the first decline in four weeks.
The 15-year fixed also fell, dropping to 6.22% from 6.26%. A year ago, it averaged 5.95%.
“Evidence that purchase demand remains sensitive to interest rate changes was on display this week, as applications rose for the first time in six weeks in response to lower rates,” said Sam Khater, Freddie Mac’s Chief Economist.
Mortgage loan applications were up nearly 10% from…
Mortgage applications fell for another week as rates remained above 7% and high home prices kept buyers on the bench.
The Mortgage Bankers Association’s weekly survey shows the adjusted Market Composite Index – a measure of mortgage loan application volume – decreased by 5.6%, piling onto the week prior’s 10.6% dip.
Adjusted purchase applications slipped by 5%, while the unadjusted index was down by 1% and was 12% lower YOY.
Rates shot moved down slightly but not by much, coming in at 7.04%. MBA’s SVP and Chief Economist Mike Fratantoni noted that this is about a quarter percentage point above the beginning of the year.
“Higher rates in recent weeks have stalled activity, and last week it dropped more for…
Mortgage rates aren’t going down as the spring homebuying season rapidly approaches.
Officials at Freddie Mac reported Thursday that the 30-year fixed-rate mortgage averaged 6.90%, up from the week prior’s 6.77%. A year ago at this time, the 30-year FRM averaged 6.50%.
The 15-year fixed jumped to 6.29% from 6.12%. A year ago, it averaged 5.76%.
“Strong incoming economic and inflation data has caused the market to re-evaluate the path of monetary policy, leading to higher mortgage rates,” said Sam Khater, Freddie Mac’s Chief Economist.
“Historically, the combination of a vibrant economy and modestly higher rates did not meaningfully impact the housing market. The current cycle is different than historical norms, as housing affordability is so low that good economic…
By KIMBERLEY HAAS
Home affordability continues to be problematic for American families. High prices, elevated mortgage rates, and a low supply of inventory have kept adults in their 20s and 30s off the housing ladder.
At the same time, homeowners with growing families are unable to move up that ladder into properties that would better accommodate their needs for the same reasons.
It’s an issue that touches all generations because older adults are worried about their children and grandchildren. They’re also aging but if their house is paid off, it often does not make financial sense to move, even if they no longer need three bedrooms on a regular basis.
But will the affordability of homes push people to vote…
By DESMOND LACHMAN
In March 2008, then Federal Reserve Chairman Ben Bernanke assured us that the sub-prime loan and housing market problems were not of systemic concern to the financial sector. Yet, in September 2008 Lehman Brothers failed in large part because of its leveraged exposure to subprime and housing market lending. Lehman’s failure in turn triggered a U.S. and world financial crisis that resulted in the 2008-2009 Great Economic Recession.
Fast forward to today. Last Sunday, Fed Chair Jerome Powell gave a television interview to 60 Minutes on the monetary policy challenges that lay ahead. In that interview, he went out of his way to provide assurances similar to those of Ben Bernanke in 2008 about the stability of…
By PATRICK LAVERY
Saying the economy has surprised even the experts since the start of the COVID-19 pandemic nearly four years ago, Federal Reserve Board Chairman Jerome Powell on Wednesday announced that the Fed would hold its ground for now and keep its policy interest rate unchanged at its current range of 5.25% to 5.5%.
“We believe that our policy rate is likely at its peak for this tightening cycle and that, if the economy evolves broadly as expected, it will likely be appropriate to begin dialing back policy restraint at some point this year,” Powell said in prepared remarks following the first two-day Federal Open Market Committee meeting of 2024.
The decision by the FOMC was not unexpected, and…
