Refinance applications surge as mortgage interest rates tick down
In the week ending June 27, applications to refinance rose 7%, the Mortgage Bankers Association, an industry group, announced on July 2. Rates for home loans fell to the lowest since April that week, with the popular 30-year fixed-rate mortgage averaging 6.79% nationwide.
Refinance applications were a whopping 40% higher than a year earlier. In contrast, applications for purchase mortgages were unchanged.
The big jump in refinance application volumes is somewhat surprising given the small move in rates.
'Despite the small decline, mortgage rates continue to hover in the same 6%-7% range seen over the past year,' pointed out Kara Ng, a senior economist at Zillow, in a statement following the release. 'Rates remain stuck in this range, reflecting competing economic signals: signs of a gradually cooling economy argue for lower rates, while persistent inflation supports upward pressure."
"Homeowners are looking for any chance to save money on their housing costs, and even small savings can make a difference right now given the total cost of housing," said Dan Richards, President of Flyhomes Mortgage, in an email exchange with USA TODAY.
"That's part of what's driving the recent uptick in refinancing," Richards continued. "A lot of people who bought in the last few years have been waiting for mortgage rates to fall below that 'magic' 6% mark to refi, but another year has passed and it's becoming clear that rates in the 6-7% range are the new normal."
Many economists, including Zillow's Ng, expect rates to make little moves from here, and traders in mortgage futures now expect the 30-year fixed-rate mortgage to average about 6.7% in November, according to the ICE Mortgage and Housing Market Research team.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Chicago Tribune
36 minutes ago
- Chicago Tribune
US employers slash hiring as Trump advances a punishing trade agenda
WASHINGTON — U.S. hiring is slowing sharply as President Donald Trump's erratic and radical trade policies paralyze businesses and raise doubts about the outlook for the world's largest economy. U.S. employers added just 73,000 jobs last month, the Labor Department reported Friday, well short of the 115,000 expected. Worse, revisions shaved a stunning 258,000 jobs off May and June payrolls. And the unemployment rate ticked higher to 4.2% as Americans dropped out of the labor force and the ranks of the unemployed rose by 221,000. 'A notable deterioration in U.S. labor market conditions appears to be underway,' said Scott Anderson, chief U.S. economist at BMO Capital Markets. 'We have been forecasting this since the tariff and trade war erupted this spring and more restrictive immigration restrictions were put in place. Overall, this report highlights the risk of a harder landing for the labor market.' Economists have been warning that the rift with every U.S. trading partner will begin to appear this summer and the Friday jobs report appeared to sound the bell. 'We're finally in the eye of the hurricane,' said Daniel Zhao, chief economist at Glassdoor. 'After months of warning signs, the July jobs report confirms that the slowdown isn't just approaching—it's here.' U.S. markets recoiled at the jobs report and the Dow tumbled more than 600 points Friday. But President Donald Trump responded to the weak report by calling for the firing of Erika McEntarfer, the director of the Labor Department's Bureau of Labor Statistics, which compiles the jobs numbers. 'I have directed my Team to fire this Biden Political Appointee, IMMEDIATELY,' Trump said on Truth Social. 'She will be replaced with someone much more competent and qualified.' Trump questioned the big revisions, but they are a standard part of the monthly jobs report. The Labor Department revises its numbers as more data comes in. Particularly since COVID-19, businesses have taken longer to respond to the government's survey on hiring. As more data has come in later than in the past, the potential for large revisions has increased. Revelations in the new data raise questions about the health of the job market and the economy as Trump pushes forward an unorthodox overhaul of American trade policy. Trump has discarded decades of U.S. efforts to lower trade barriers globally, instead, imposing hefty import taxes — tariffs — on products from almost every country on earth. Trump believes the levies will bring manufacturing back to America and raise money to pay for the massive tax cuts he signed into law July 4. Mainstream economists warned that the cost of the tariffs will be passed along to Americans, both businesses and households. That has begun. Walmart, Procter & Gamble, Ford, Best Buy, Adidas, Nike, Mattel, Shein, Temu, Stanley Black & Decker, have all hiked prices due to U.S. tariffs. Economists at Goldman Sachs estimate that overseas exporters have absorbed just one-fifth of the rising costs from tariffs, while Americans and U.S. businesses have picked up the lion's share of the tab. Trump has sowed uncertainty in the erratic way he's rolled the tariffs out — announcing, then suspending them, then coming up with new ones. Overnight, Trump signed an executive order that set new tariffs on a wide swath of U.S. trading partners to that go into effect on Aug. 7, and that comes after a flurry of unexpected tariff-related actions this week. 'There was a clear, significant, immediate, tariff effect on the labor market and employment growth essentially stalled, as we were dealing with so much uncertainty about the outlook for the economy and for tariffs,' said Blerina Uruci, chief U.S. economist for the brokerage T. Rowe Price. Still, Uruci said the data suggests we could be past the worst, as hiring actually did pick up a bit in July from May and June's depressed levels. 'I'm not overly pessimistic on the U.S. economy based on this morning's data,' she said, though she does think that hiring will remain muted in the coming months as the number of available workers remains limited due to reduced immigration and an aging population. 'Because of immigration policy, labor supply growth has nearly ground to a halt,' said Guy Berger, senior fellow at the Burning Glass Institute, which studies employment trends. 'So we're going to have very weak employment growth. And we look like southern Europe or Japan.' Still, with fewer workers available, the economy doesn't need to generate many jobs to soak up the unemployed. That could keep the unemployment rate from climbing much, Berger added. Trump has sold the tariffs hikes as a way to boost American manufacturing, but factories cut 11,000 jobs last month after shedding 15,000 in June and 11,000 in May. The federal government, where employment has been targeted by the Trump administration, lost 12,000 jobs. Jobs in administration and support fell by nearly 20,000. Healthcare companies added 55,400 jobs last month – accounting for 76% of the jobs added in July and offering another sign that recent job gains have been narrowly concentrated. The department originally reported that state and local governments had added 64,000 education jobs in June. The revisions Friday slashed those jobs to less than 10,000. Those revisions also revealed that the U.S. economy has generated an average of just 85,000 jobs a month this year, barely half last year's average of 168,000 and well below an average 400,000 from 2021-2023 as the economy rebounded from COVID-19 lockups. The weak jobs data makes it more likely that Trump will get one thing that he most fervently desires: A cut in short-term interest rates by the Federal Reserve, which often — though not always — can lead to lower rates for mortgages, car loans, and credit cards. Fed Chair Jerome Powell and other Fed officials have repeatedly pointed to a healthy job market as a reason that they could take time to evaluate how Trump's tariffs were affecting inflation and the broader economy. Now that assessment has been undercut and will put more pressure on the Fed to reduce borrowing costs. Wall Street investors sharply raised their expectations for a rate cut at the Fed's next meeting in September after the report was released. On Wednesday, the Fed left its key rate unchanged for fifth consecutive meeting and Powell signaled little urgency to reduce rates anytime soon. He said the 'labor market is solid' with 'historically low unemployment.' But he also acknowledged there is a 'downside risk' to employment stemming from the slow pace of hiring that was evident even before Friday's weaker numbers. The current situation is a sharp reversal from the hiring boom of just three years ago when desperate employers were handing out signing bonuses and introducing perks such as Fridays off, fertility benefits and even pet insurance to recruit and keep workers. The rate of people quitting their jobs — a sign they're confident they can land something better — has fallen from the record heights of 2021 and 2022 and is now weaker than before the pandemic. Drees Homes, a homebuilder based outside Cincinnati in Fort Mitchell, Kentucky, has hired about 50 people over the past year, bringing its workforce to around 950. Pamela Rader, Drees' vice president for human resources, it's 'gotten a little bit easier'' to find workers. A couple of years ago, Rader said jobseekers were focused on getting more pay. Now, she said, they emphasize stable employment, a better work-life balance, and prospects for advancement.
CNBC
37 minutes ago
- CNBC
Social Security marks its 90th anniversary — here's what could happen to future benefits
Ninety years ago, President Franklin Delano Roosevelt signed the Social Security Act, which created the program that now sends monthly benefit checks to millions of Americans, including retirees, disabled individuals and families. But by the time the program celebrates its centennial, benefits may not look the same as today's Social Security payments. The reason: Social Security's trust funds, which the program relies on to help pay benefits, are facing a looming shortfall. Starting in 2033 — two years before its 100th anniversary — the program may only be able to pay 77% of scheduled benefits for retirees, their families and survivors, Social Security's trustees projected in an annual report released in June. However, should those funds be combined with Social Security's trust fund for disability benefits, as has happened in prior emergencies, payments may be cut one year later, in 2034. At that point, 81% of scheduled benefits would be payable, Social Security's trustees project. Importantly, Social Security benefits would not disappear entirely. The program would still have ongoing income from payroll taxes to help fund benefit payments. That scenario is not inevitable. Changes to the program may be enacted sooner to shore up its funding and prevent sudden benefit cuts. Most, 83%, of surveyed Americans think Social Security reform should be a top priority for Congress, even if it means benefit cuts or tax increases for future beneficiaries, according to a new poll from the Bipartisan Policy Center's American Savings Education Council. The group polled more than 4,000 adults. "This is the time for action," said Sen. Bill Cassidy, R-Louisiana, who is among the lawmakers pitching a plan to help restore the program's solvency, told Cassidy has teamed up with Sen. Tim Kaine, D-Virginia., to co-lead a bipartisan pitch — the centerpiece of which is a new $1.5 trillion investment fund for Social Security, separate from Social Security's current trust funds. The initial $1.5 trillion outlay would be borrowed. Because the money would be held in escrow and could be liquified, it would not increase the national debt, Cassidy said. The funds would be invested more aggressively than Social Security's current trust funds, which are invested in U.S. Treasury securities. Because those investments are backed by the full faith and credit of the U.S. government, they are secure. However, the average rate of return over a one-year period was around 2.5% in 2024. In contrast, the S&P 500 has returned an annual average of around 10%, though those results vary from year to year. Investing the proposed separate investment fund in stocks, bonds and other investments could cover an estimated 70% of Social Security's trust fund shortfall, Cassidy said. That would make it much more doable for lawmakers to address the remaining 30%, he said. The senators' plan does not include any benefit cuts or tax increases for seniors, Cassidy said. It would provide benefit increases for two cohorts — beneficiaries age 80 and older who are at less than 200% of the federal poverty level, and low earners who have a long work history earning low wages. Lawmakers could consider increasing the size of the investment fund to help cover the rest of the shortfall, he said. Rights to manage the fund would be left to a bidding process, which could result in lower fees and higher returns, Cassidy said. Critics, including Rep. John Larson, D-Conn., have said investing in other securities as the senators' plan suggests would privatize Social Security and therefore threaten Americans' retirement security. In response, Cassidy points to the federal Railroad Retirement system, which in 2001 moved from investing solely in government bonds to more aggressive instruments, including stocks. That change was approved by lawmakers on both sides of the aisle and has helped the program operate with a positive balance today. Still, some experts are dubious. In a recent Wall Street Journal op-ed, Andrew Biggs, a senior fellow at the American Enterprise Institute, said while he applauded the first bipartisan plan to fix Social Security in two decades, he questions whether the plan could work. Among the concerns he details are the amount of money that the plan requires the government to borrow, as well as the increased investment risk that would be required without a guarantee of higher returns. Cassidy and Kaine are not the only lawmakers looking at potential solutions to solve Social Security's dilemma. Larson has a plan that has been reintroduced in multiple sessions of Congress that would provide benefit increases while increasing taxes on the wealthy. The last time Social Security was meaningfully enhanced was in 1971 under President Richard Nixon, Larson said in an interview with More than 5 million Americans currently receive below poverty-level checks from Social Security, according to Larson. Larson's most recent proposal from 2023 would temporarily increase benefits for all beneficiaries, while also providing specific enhancements for those receiving minimum benefits; widows or widowers in two-income households; and children of deceased, disabled or retired workers who are full-time students. The plan also proposes changing the way annual cost-of-living adjustments are calculated. To pay for those benefit increases, Larson's plan calls for income over $400,000 to be subject to payroll taxes. In 2025, workers stop contributing to Social Security for the year once they reach an income of $176,100. Both employers and employees pay a 6.2% tax on wages up to that threshold. More from Personal Finance:Social Security cost-of-living adjustment may be 2.7% in 2026'Big beautiful' bill does not eliminate taxes on Social Security benefitsHow having a 'bridge' strategy can help Social Security claiming The Bipartisan Policy Center poll finds a majority of Americans support lifting the cap on income subject to payroll taxes, with 65% of Democrats and 62% of Republicans. That includes a "significant majority" of respondents with annual household incomes over $200,000, according to the results. Larson's plan also called for a separate 12.4% tax on net investment income for taxpayers making over $400,000. Larson plans to reintroduce his plan in the current session of Congress with some tweaks. "We'll be rolling out a presentation in September that will include not only protecting Social Security, but also enhancing it," Larson said. The plan will also make it Congress' responsibility to act more frequently to help ensure benefits continue to meet individuals' needs, he said. "I think that that's got to be paramount to keeping this in check," Larson said. Larson plans to push for a vote on his bill. But he also wants an open debate. "There has to be a public discussion," Larson said. Most Americans — 64% of Democratic voters and 61% of Republicans — want Congress to work together across party lines to reform Social Security, the Bipartisan Policy Center found in its recent poll. That's as 41% of surveyed Americans expect Social Security will be their primary source of income in retirement, according to the BPC. Moreover, 74% of Americans worry Social Security will run out before they retire, while 80% worry Congress will cut benefits. Nevertheless, the poll results show Americans would welcome a "comprehensive, balanced reform package that entails both benefit adjustments and tax increases," said Emerson Sprick, director of retirement and labor policy at the Bipartisan Policy Center. Increasing taxes on the wealthiest 1% to help repair the program's finances had the most support among BPC's poll respondents, with 85% of Democrats and 72% of Republicans. That's in contrast to the 65% of Democrats and 62% of Republicans who support a higher cap on payroll taxes. A majority of voters also support adjusting benefits for those most in need, with 63% of Democrats and 62% of Republicans; reducing benefits for higher income individuals, with 64% of Democrats and 61% of Republicans; and increasing the amount that both employees and employers pay into the program, with 61% of both Democrats and Republicans. Most voters also support encouraging legal immigration that would result in more workers paying into the program, with 64% of Democrats and 54% of Republicans. The urgency of addressing Social Security's funding woes will increase over time. Two new laws have provided generous enhancements for certain Social Security beneficiaries. The Social Security Fairness Act increased benefits for some public pensioners, while President Donald Trump's "big beautiful" budget and tax package provides a tax deduction for seniors. The changes in both laws will accelerate the trust fund depletion dates. The Fairness Act was included the Social Security trustees' latest projections. The more recent "big beautiful" legislation will move the insolvency date for the retirement trust fund to late 2032 up from the early 2033 trustees' projection, according to the Committee for a Responsible Federal Budget. Senators who are elected in 2026 will be in office during those projected depletion deadlines, Sprick said. As the trust fund depletion dates come closer, there will be more discussion about Social Security's future on Capitol Hill, Sprick said. The current proposals on Capitol Hill are a start, he said. "We've put this off for way too long; the political process moves very slowly," Sprick said. "But that does not negate the fact that these conversations are moving in the right direction."
Miami Herald
an hour ago
- Miami Herald
Miami man who swindled millions from Venezuelan-American investors sentenced to 7 years
Dozens of Venezuelan-Americans who were swindled by a local businessman after investing tens of millions of dollars in his payday loan company poured into Miami federal court on Thursday. One of them, David Villanueva, said he entrusted his life savings to Efrain Bentcourt Jr., the head of Sky Group USA, which used investors' funds to finance high-interest loans. 'We went to therapy,' Villanueva told U.S. District Judge Darrin Gayles, explaining that he lost 'the majority' of his $1.3 million investment in Sky Group. 'My whole family was affected by this. We considered going back to Venezuela because we found ourselves without any money.' Gayles punished Betancourt with a seven-year prison sentence — nine months more than a federal prosecutor recommended, following the former Sky Group CEO's guilty plea to a wire fraud conspiracy in an agreement struck in May. As part of that deal, Betancourt, a dual U.S. and Colombian citizen who was born in Venezuela and grew up in South Florida, must pay $8.3 million in a forfeiture judgment for the money that he pocketed from investors and used for personal expenses, including buying a Biscayne Boulevard luxury condo and financing his wedding at a chateau in the French Riviera.. Betancourt, 36, also will likely be ordered by the judge to pay back at least $23 million to hundreds of victims for their losses. In total, Betancourt attracted about 600 Venezuelans in South Florida to invest $66 million over five years into his business, which used the funds from new investors to pay off old ones before his scheme collapsed during the COVID-19 pandemic in 2020. Assistant U.S. Attorney Roger Cruz called Betancourt a 'recidivist fraudster' who lied to investors, while defense attorney Sam Rabin argued that his client started his payday loan business with 'good intentions' before it turned into an investment scheme. 'To say that he's a serial fraudster is, frankly, unfair,' said Rabin, who urged the judge to give Betancourt a sentence of less than six years, to no avail. He suggested that about 40 investment victims coordinated a 'letter-writing campaign' to the court that seemed suspicious because of their similiar content — an accusation that Cruz strongly denied. Betancourt, who has not repaid any of his victims, appeared remorseful as he stood up in court to address the judge, saying he was ashamed of himself for hurting so many people. He pledged to pay them back. 'You deserve an apology,' said Betancourt, who drew support from his parents, a pastor and dozens of friends who attended his sentencing. 'I can only say that I didn't wake up in the morning and decide to break the law.' According to court records, Betancourt's company made about $12.2 million in consumer loans — far less than the $66 million Sky Group attracted from investors. Betancourt and other employees spent the rest of the investors' money on operating costs, sales agent commissions and personal expenses, according to a factual statement filed with his plea agreement. Betancourt has been in federal custody since his arrest last November by FBI agents at Miami International Airport, after Cruz argued he was a flight risk to Latin America or the United Arab Emirates. Three years ago, Betancourt and his company reached a settlement with the Securities and Exchange Commission in a parallel civil case. SEC lawyers accused him of using his payday loan business to fleece investors, and a federal judge ordered him and his company to pay back more than $39 million. But since the SEC settlement agreement, Bentacourt's investors have received nothing for their losses, according to authorities. Both the SEC and federal prosecutors accused Betancourt of operating a 'Ponzi scheme' that began in 2016 by selling promissory notes to investors with promises of double- and triple-digit annual returns. Some investors were paid back in part, but most were not, leaving a huge debt after Sky Group imploded during the COVID-19 pandemic in 2020. Betancourt's scheme collapsed when countless borrowers defaulted on their payday loans during the pandemic. His company, Sky Group, incurred a severe cash-flow problem and was unable to make interest payments on investors' promissory notes. A Miami lawyer representing three investors who won civil arbitration cases against Betancourt said he brought the investment scheme to the SEC's attention years ago. 'These were people who had given all or part of their life savings to Mr. Betancourt,' attorney Richard Diaz told Judge Gayles during Thursday's sentencing hearing. After Betancourt lost at arbitration, he refused to apologize to the victims. 'I took a professional offense to that,' Diaz told Betancourt's defense attorney, Rabin, during the sentencing hearing. According to the SEC and federal court records, Betancourt misappropriated investors' money for his personal use, including buying a $1.5 million condominium at Epic Residences on Biscayne Boulevard and servicing his personal Piper airplane. Betancourt was also accused of transferring at least another $3.6 million to friends and family, including his ex-wife, Angelica Betancourt, and to another company, EEB Capital Group LLC, for 'no apparent legitimate business purpose,' SEC officials said. That company's bank accounts were controlled by Efrain Betancourt and his current wife, Leidy Badillo. In a SEC settlement in 2022, EEB Capital agreed to pay $2.2 million toward the judgment against Sky Group and Efrain Betancourt. Angelica Betancourt argued that she only earned an annual salary of $60,000 from the payday loan company, according to court records. But in 2022, she also agreed to pay about $1.1 million toward the judgment against Sky Group and her ex-husband.
