How much would a $175,000 HELOC cost monthly in 2025?
homeowner
with a big financial expense on the horizon or have plans for projects around the house, a
home equity line of credit (HELOC)
is a popular way to fund your endeavors. Now is an excellent time to consider opening a HELOC, as
the average homeowner has $313,000 of home equity
built up in their home and
HELOC rates have dipped under 8%
.
A
HELOC
is a line of credit you can borrow from whenever you need it, up to your account limit. It's a flexible source of funding that requires interest-only repayments for what you borrow during your
draw period
. So, if you open a $175,000 HELOC to fund home
renovations
and
repairs
, you could pull money from your line of credit incrementally as your projects progress and pay back only the interest on what you take out.
Home equity loans
and
cash-out refinances
are two
other ways
to
tap your home equity
but neither offers the flexibility a HELOC does.
So, if you're ready to get a $175,000 HELOC, it helps to know how much it would cost you per month to have a HELOC of that size. We've done the calculations for you, noting your monthly costs for two different HELOC repayment terms.
Find out how low your HELOC rate could be here
.
As you calculate the cost of having a HELOC, it's important to know that HELOC rates are
variable
. Whereas a
home equity loan
has a fixed rate that doesn't change,
HELOC rates
can change regularly based on a variety of factors. Right now, a variable rate is an advantage because HELOC rates are low and have been consistently declining. However, rates could rise as easily as they fall, so be prepared for shifts in your monthly payments over time. That being said, here's how much a $175,000 HELOC would cost monthly in 2025 at
today's rates
if rates remain the same:
Knowing that HELOC rates can change, here's what your monthly payment for a $175,000 HELOC would look like if rates fell 0.5%:
Here's what your rates for a $175,000 HELOC would look like if rates rose 0.5% compared to today's rates:
A 0.5% increase or decrease in rates could change the monthly payment on a 10- or 15-year $175,000 HELOC by around $50 a month.
Take your first step in securing a HELOC today
.
HELOC rates have steadily declined this year, hitting
18-month
and
two-year
lows. For context, HELOC rates were above 10% in January 2024 and exceeded 9.80% in May and September last year, according to
Bankrate data
.
On December 31, rates were 8.36% and have dropped by more than 0.40 percentage points since. Here's a monthly overview of how far rates have fallen to date in 2025, according to Bankrate:
Low HELOC rates
right now make them an attractive way to access your home equity. However, the downward trend in rates doesn't guarantee that rates will
continue to fall
. There's always a chance rates can creep up just as they've done in the past. Keep this in mind as you incorporate your HELOC payment in your monthly spending, says Tom Holtam, vice president, senior regional delivery manager at UMB Bank.
"Most HELOCs have a variable interest rate, meaning your rate, and therefore your minimum payment requirement, are subject to change, which can make it trickier to budget over the repayment period," Holtam says.
With an average rate of 7.90% right now, a HELOC is an
affordable
way to get access to $175,000 for homeowners with sufficient equity. With such a big sum of money at play, though it's important to remember a few basic principles of responsible HELOC borrowing. Primarily, only borrow what you need, make sure you have a clear purpose for the line of credit and remember that your home is used as collateral for your line of credit, says Michael Branson, CEO of All Reverse Mortgage.
"A HELOC can be a great tool, but since your home is the collateral, you don't want to borrow more than you actually need or take it out without a solid plan," Branson says. "Before applying, make sure you have a clear reason — whether it's home renovations, debt consolidation or another major expense — and figure out how you'll pay it back. The flexibility of a HELOC is great, but it's easy to overspend if you're not careful."
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Yahoo
3 hours ago
- Yahoo
What to do if you are denied a HELOC or home equity loan
Key takeaways Getting approved for a HELOC or home equity loan isn't easy, with nearly half of applications denied. Poor credit, a high debt-to-income ratio or a large outstanding mortgage balance may contribute to being rejected for a HELOC or home equity loan. If you are denied, paying down your mortgage or adjusting your ask, improving your credit score and paying off debts can boost your chances when you reapply. Shop Top Mortgage Rates Your Path to Homeownership A quicker path to financial freedom Personalized rates in minutes Congratulations if you are among the millions of homeowners with a share of the $11 trillion in tappable home equity in the U.S. today. To unlock that wealth, you might well be tempted to take out a home equity loan or home equity line of credit (HELOC). These borrowing methods can provide funds to eliminate high-interest debts, pay for home renovations, or tackle other significant expenses. Before you start counting the coins in your housing piggy bank, though, a reality check: Getting approved for a HELOC or home equity loan isn't easy. Roughly half of the applications get rejected — far more than the rate of primary mortgage denials. If you are denied, here are six things you can do about it, along with ways to boost your chances of getting approved. 47.59% The denial rate on HELOC applications in the fourth quarter of 2024. Source: Home Mortgage Disclosure Act Understand why you were denied First things first: Find out why your application was denied. 'Lenders will share the reason very specifically, but you may have to ask,' says Tom Hutchens, president of Angel Oak Mortgage Solutions, a non-qualified mortgage lender based in Atlanta, GA. 'Find out the reason and if it seems like there's a way to get over that hurdle, then continue on.' Frequently, it is tougher to get a second mortgage than a primary mortgage. While HELOC rejection rates are the lowest in four years, about half of applications are still denied, for example. Successful applicants tend to have high credit scores and low levels of debt, including relatively small outstanding mortgage balances (less than half their home's value). Why is it so hard to borrow against your home's equity? Lenders are more stringent for good reasons. In the first place, they can't sell home equity loans on the secondary market as readily as they can purchase (primary) mortgages: They have to keep them on their books. Then, in the event of a borrower default, the lender is second in line to recover their funds, behind the primary mortgage lender. So they're taking on more risk by giving you money. Home equity loan requirements What do lenders consider when evaluating HELOC and HELoan applications? Typically, they look for a strong credit score and solid financials like low debt levels, especially if you already have a mortgage. Here are some of the typical minimum requirements: Credit score Minimum score of 640 or higher Ownership stake At least 15-20% equity in the home Debt-to-income ratio Below 43 percent Combined loan-to-value ratio No more than 80-85 percent Income No set level, but you will need to demonstrate stable, sufficient income to handle all obligations What to do if you're denied a HELOC or home equity loan Now that you know what lenders are looking for, let's get your financial house in order. Increase your home equity stake Lenders calculate how much to let you borrow by calculating your combined loan-to-value ratio (CLTV). This ratio compares the total amount of loans secured by your property to its appraised value, and it includes both your mortgage amount and the amount of the loan or credit line you're requesting. Generally, lenders prefer a CLTV of no more than 80 percent to minimize their risk. In other words, they'll only lend you up to 80 percent of your home's worth. If you're already carrying a sizable mortgage, this could be a problem. 'Once an appraisal [in the home] is done, they might find that there's not enough equity left to get a HELOC while keeping the CLTV at 80 percent,' Hutchens explains. He notes that some homeowners might face challenges if they made a small down payment, have not paid off much of their mortgage, or if their property hasn't appreciated much. 'If there is not enough equity in the home, that would be a hard one to fix,' Hutchens allows. If the appraisal is the problem, you can request a second one from another appraiser, or a re-do by the first. For the latter, you'll need to pinpoint some actual errors in the report, though — like a miscalculation of the home's square footage or facilities, or inappropriate comps (comparable homes that have recently sold). Otherwise, if your ownership stake is falling short, you should hit pause on your plans and work on building your equity. You can do this by paying down your mortgage faster with extra payments or making home improvements to boost your home's value (assuming you can afford to). Adjust your ask If your equity stake is insufficient for the amount of funds you want, attack the problem from the opposite angle: Adjust the size of your loan request. Consider asking for a smaller loan or credit line — one that'll fit the CLTV limits the lender sets. You could also accept a higher annual percentage rate (APR). By being flexible with these terms, you may reduce the perceived risk for the lender, potentially making it easier for them to approve your application. 47.4% Percentage of mortgaged residential properties in Q2 2025 that are 'equity rich': The outstanding loans on them total no more than half their estimated market values Source: ATTOM Boost your credit score If your credit score is 700 or above, you're in a good position to get approved for a HELOC or HELoan. In fact, the average score for HELOC borrowers in the third quarter of 2024 was 763, according to Home Mortgage Disclosure Act data. 'Surprisingly, many folks are not as aware of their credit score as they probably should be,' says Ralph Herrera, Realtor and senior real estate advisor at Engel & Völkers Atlanta, a real estate service provider based in Georgia. 'Folks don't pay attention to that until maybe it's too late. A little bit of planning in advance is helpful to prepare.' If your credit score was the reason for denial, start by reviewing your credit report for any errors that could be affecting your score. Dispute any inaccuracies with the credit bureaus. Additionally, enhance your chances of approval by paying down your debt, making payments on time, and steering clear of opening new credit accounts. Pay down your debts When applying for a home equity loan, lenders check your debt-to-income ratio (DTI) to ensure you can comfortably handle the extra obligation. DTI is the percentage of your monthly income that goes toward paying your regular, monthly debts. A high DTI can be a significant obstacle in getting approved for a HELOC and a HELoan. Most home equity lenders look for a DTI ratio no greater than 43 percent, and the median DTI of a HELOC borrower was 41.45 percent in Q3, according to HMDA data. 'With property values being high, if someone bought a house within the last couple of years and their interest rate is higher than those prior to that, then borrowers are running into some DTI challenges,' says Hutchens. (Indeed, the median HELOC borrower's DTI was only 35.46 percent in Q4 2021.) To improve your chances of approval, work on reducing your existing debt by paying off high-interest loans and credit cards. Increasing your income through extra work or negotiating raises are other ways to lower your DTI. Apply with a different lender If one lender turns you down for a HELOC or HELoan, don't give up. Try applying with a different lender, as each has its own criteria and risk tolerance. You could always seek out a lender who allows a bigger CLTV (say, 85 or 90 percent). 'There are lots of different loan programs and lots of different HELOCs out there,' says Hutchens. 'Actually, they're very highly sought-after right now. There's liquidity in the market, meaning lots of investors are interested in owning HELOCs.' If you are considering reapplying with the same lender, remember to wait a while before submitting a new request. The waiting period varies by lender, but you'll want it to be at least a month and maybe up to six months, depending on the reasons for the denial. The longer the better — if you've used the time to improve your financial profile, credit score or employment history. Consider alternative financing options Improving your finances takes time. If you're in a hurry, it might be better to consider alternatives to home equity loans. Common ones include: Personal loans are unsecured, meaning you don't have to use your home as collateral. They often have higher interest rates and shorter repayment terms, but they can be quicker and easier to obtain than home equity options. Credit cards can be another option for minor expenses. However, the high interest rates make them less suitable for large sums unless you can pay off the balance quickly. A shared equity agreement, which is actually an investment rather than a loan. You receive a lump sum of cash immediately from a home equity investing firm, and agree to share a portion of your home's sale profits or its appreciated value later. Loans from friends or family can often be more flexible and cost-effective. However, make sure you set clear repayment terms from the beginning to prevent misunderstandings and potential strains on your relationships. $213,000 The amount of tappable equity that the average mortgage-holding homeowner has–that is, borrow against while maintaining a 20% equity stake in the home Source: ICE Mortgage Monitor FAQ Is it hard to get a HELOC? Nearly half of HELOC applicants are rejected due to poor credit scores, insufficient home equity or high debt-to-income ratios. The best candidates have paid off much of their mortgage and own half of their home outright. A higher-than-average credit score and a lower debt-to-income ratio are also key in getting a home equity loan or HELOC. Do they check income for a home equity loan? Yes. Lenders will need copies of your W2s or 1099s, paystubs and sometimes tax returns to verify your income. HELOCs and home equity loans do not have a specific income threshold for approval, but you must meet the lender's debt-to-income ratio (DTI) level; these documents allow them to calculate that. In addition, you will need to demonstrate that your income is steady, indicating you can afford your monthly payments. Do they inspect your house for a home equity loan? Lenders may order a home inspection, but it is not commonly done for a home equity loan or HELOC. A home inspection identifies potential structural concerns and other repairs that might impact the property's value and/or sale. However, the lender will usually require an appraisal report on your home. The appraisal evaluates your home's market value: The appraiser will take into consideration the home's size and features, any upgrades/expansions, and its overall condition; they will then analyze the recent sale price of comparable homes nearby to come up with an estimate of your home's worth. This appraisal estimate determines the dollar value of the equity the homeowner has, which in turn influences how much they can borrow. Increasingly for home equity loans, lenders use automated valuation models (AUM) to appraise homes, though some may still require an in-person appraisal. Additional reporting by Maya Dollarhide Sign in to access your portfolio
Yahoo
9 hours ago
- Yahoo
Which is better: $50k HELOC or $50k credit card?
If you've got a big, five-figure expense coming up – maybe a home renovation or a medical bill – you may be staring down two options: a HELOC (home equity line of credit) and a high-end credit card. Both are types of revolving, or open-ended credit, meaning you can borrow funds from them, pay back, and borrow again – at a variable interest rate. Right now, with HELOC rates at their lowest levels in months and credit card rates holding close to a record high, the home equity product would seem to have the edge. But there are other considerations, ranging from your credit score to your need for the funds. So, let's parse the differences between a $50,000 HELOC or a $50,000 credit card: their features, their real costs, and when one might be better than the other. How does a HELOC work? A HELOC is essentially a line of credit backed by the equity in your home. The size of your credit line is based primarily on the size of your homeownership stake, along with your income and credit score. Generally, though HELOCs come in considerable amounts. For example, Bank of America, a leading lender, offers HELOCs of a minimum of $25,000 up to a maximum of $1 million. Shop Top Mortgage Rates Personalized rates in minutes A quicker path to financial freedom Your Path to Homeownership 'A HELOC is similar to a credit card in that you can draw what you need, as you need, up to the limit your lender sets,' says Kyle Enright, president of California-based home equity lender Achieve. 'And, like a credit card, you pay interest just on what you've used.' However, while a HELOC starts out behaving like a credit card, it eventually turns into a loan. You can withdraw funds for a set period (typically 5 to 10 years). Then, you pay back interest and principal in the repayment period (usually 10 to 20 years). Advantages of HELOCs Borrowers typically open HELOCs to finance large home renovations or projects. However, they can be used for almost anything – including, ironically, paying off high-interest credit card debt. Their main benefits include: Lower interest rates: As of mid-2025, average HELOC rates run in a range of 4.99 percent to 12.25 percent – their lowest levels in months, according to Bankrate's weekly survey of lenders. That is well below most credit card APRs and personal loan rates. High borrowing limits: HELOCs are serious money loans. The average credit line limit is almost $150,000. Last year, the average HELOC balance was over $45,000, according to Experian. Potential tax deduction: Interest may be deductible if used for home improvements (check the details with a tax pro). Ability to freeze interest rate: Many HELOC lenders let you lock in the rate on all or a portion of your balance, so you pay interest at a fixed rate, rather than the usual fluctuating one. Get more from your home Keep your financial options open and put your equity to use with a flexible HELOC. Explore HELOC offers Disadvantages of HELOCs HELOCs do have their downsides, of course. The biggest one: Your home acts as collateral for the debt. That means borrowers 'risk foreclosure should payments not be made regularly,' says Chris Parks, loan officer at Churchill Mortgage, a home equity loan lender based in Tennessee. Aside from the danger of losing your home, HELOC disadvantages include: Upfront expenses: HELOCs often come with application fees, appraisal fees and other closing costs; these can amount to as much as 5 percent of your credit line, or hundreds of dollars, to be paid out-of-pocket. Slow funding: Since it's a type of mortgage, applying for a HELOC can be a lengthy, month-long process. Limited access window: Once the draw period ends, you can no longer borrow funds. So the clock is ticking when it comes to using the HELOC. Sudden jump in payments: Many HELOCs let you pay back just interest during the draw period (similar to the minimum payment on a credit card). Unfortunately, 'interest-only payments will not move the needle very quickly,' in terms of your overall debt, as Parks says. Result: a big jump in your monthly bill – which will include paying back principal – when the repayment period begins. How does a high-end credit card work? With high-end or premium credit cards, it's not unheard of to have limits of $100,000 or more. The thing is, getting one can be a bit of a mystery: You can't shop for a card with a specific balance, because lenders typically don't disclose your credit limit until after you apply and are approved. And, while your credit score and annual income are the chief factors in getting approved, card issuers typically don't disclose requirements for those either. That said, travel-oriented cards and rewards-oriented cards tend to offer these larger credit lines. Advantages of credit cards Credit cards are completely open-ended and ongoing — as long as you make minimum payments, you can handle repayment on your own schedule. In addition: Quicker access: It's typically a faster and easier process to be approved for a credit card, as it requires less financial documentation than a HELOC. No collateral: Credit cards are unsecured. So you aren't at risk of losing your home, as with a HELOC. Rewards and cash-back: These cards offer a long list of perks, like travel and dining credits, as well as luxury hotel benefits. You can earn cash back at a generous clip, too. Intro 0% APR offers: Some premium cards offer 12–21 months of zero interest charges on purchases or balance transfers. HELOCs, at best, offer an introductory interest rate a few points lower than prevailing rates – for 6-12 months. Disadvantages of credit cards Everything about a premium credit card is high – and that includes the cost of carrying a balance on it. 'You're never going to see a [premium] credit card that has a rate lower than 15 to 18 percent,' says Benet Wilson, lead credit card writer at Bankrate. And those terms are for people with extremely strong credit scores. In general, the premium cards' interest rates range from 19 to 30 percent. Here are some other reasons you may want to think twice before you swipe: Temptation to overspend: A large credit limit and ongoing term can encourage unnecessary purchases, leading to unmanageable debt. Annual fees: Premium perks come at a price. HELOC annual fees can range from $5 to $250, while fees for a high-end card can easily cost double that, even reaching into the four figures. The Chase Sapphire Reserve, one of the most popular high-tier cards, charges a $795 annual fee, for example. Credit score requirements: You need a near-perfect credit score in the 800s to be approved. A 740 is often the rock-bottom minimum. Impact of missed payments: 'The credit card may not be able to foreclose on your house, but they can make life difficult with liens or garnishments,' says Parks. Bankrate's take: HELOC rates, currently averaging 8.12 percent, have been declining since autumn 2024. In contrast, average credit card rates — over 20 percent currently — are holding close to a record high. HELOCs vs. high-end credit cards Feature HELOC High-End Credit Card APR 4.99%–12.25% 15%–26% Annual Fee $5–$250 $0–$795+ Approval Speed Weeks Hours (sometimes minutes) Collateral Your home None Funds Availability 5–10 years No time limit Rewards None Points, miles, cash-back Tax Deductible Interest Possibly for home improvements No Closing Costs 1%-5% of total loan amount None Risk Foreclosure if unpaid Credit damage if unpaid HELOC vs. credit card: How much would each cost per month? Let's put the $50,000 in perspective by looking at how much HELOCs and credit cards would cost monthly and over time. HELOC scenario: Suppose you take out a $50,000 HELOC at 9 percent APR. If you only made interest payments during the 10-year draw period, your monthly payment would be $375. Once the repayment period begins (assuming it also lasts 10 years), the amount jumps to nearly $640. Over the full 20 years, you'd pay roughly $26,800 in interest. Credit card scenario: Now, imagine putting that same $50,000 balance on a credit card with a 22 percent APR. If you only make the 3 percent minimum payment (about $1,500 to start), that could take decades to pay off. Over time, the interest could cost you over $91,000, nearly triple the amount you borrowed. The impact on credit scores Credit agencies treat HELOCs and credit cards differently when calculating your credit score. A HELOC is generally considered a type of installment loan, which means credit scoring models focus primarily on whether you make your payments on time rather than how much of the available credit you're using. On the other hand, credit cards are a type of revolving debt and credit utilization ratio plays a bigger role. 'The credit card is not friendly to your credit if you are carrying higher balances,' says Parks. 'Any time you're running balance is over 50 percent used on the credit card, it will affect your credit.' For those aiming for a high score, utilization at 10 percent or below is ideal. Final word on $50K HELOC vs. $50K credit card There's no one clear winner in the $50K HELOC vs. $50K credit card debate. The HELOC will almost always be cheaper, in terms of borrowing costs. And it's arguably less of a burden on your credit report. 'I'm not sure I would even use a card with a $50,000 limit as a replacement for a HELOC,' says Wilson. 'I wouldn't risk taking on a card with 20-plus percent interest at a $50,000 limit. As that debt can pile up, it can hurt your credit score and your credit utilization.' That said, a HELOC takes longer to get, and puts your home on the line. And it requires a significant equity stake to qualify. If you lack one, but have a high credit score and income – and have the self-discipline to pay off your balance – a high-limit credit card could be the better move. Plus, it won't 'expire' the way a HELOC will. 'Caution should be used with each,' Parks advises. 'Either option has a strategic value, but also carries an equally heavy risk.'
Newsweek
14 hours ago
- Newsweek
Four Jobs Where Wages Are Outpacing Inflation
Based on facts, either observed and verified firsthand by the reporter, or reported and verified from knowledgeable sources. Newsweek AI is in beta. Translations may contain inaccuracies—please refer to the original content. Wages have largely lagged behind inflation over the past few years, a shortfall attributed to a post-pandemic price surge the effects of which continue to reverberate through the economy. According to a new study by financial services firm Bankrate, inflation has risen 22.7 percent while Americans' wages have only grown 21.5 percent since January 2021. This has resulted in a current wage-to-inflation gap of -1.2 percent, meaning that income has on the whole failed to keep pace with overall price increases. Why It Matters The disparity between wages and inflation means most Americans—even those who have received bumps in their paychecks—are effectively seeing a drop in their in overall purchasing power. However, while some industries lag well behind, researchers found that certain professions have seen their pay keep up with, even outpace, price hikes since the pandemic. What To Know Bankrate drew on data from the Bureau of Labor Statistics—specifically the Consumer Price Index (CPI) and Employment Cost Index (ECI)—to measure sector-specific wage growth against inflation since 2021, and found that four industries have seen wages rise faster than prices over this period. Earnings in the accommodations and food services category have risen the fastest since 2021, climbing 27.5 percent and exceeding inflation by 4.8 percent. Next is leisure and hospitality, where wage growth has created a 4.1 percent lead over inflation. Health care and social assistance follows with a 1.7 percent wage-to-inflation gap, while retail earnings have outpaced price increases by 0.5 percent. Elise Gould, senior economist at the Economic Policy Institute and an expert in wage dynamics, told Newsweek that areas such as leisure and hospitality "experienced much faster wage growth coming out of the pandemic because of the sheer numbers of jobs lost and the need for employers to scramble to attract and retain workers." These effects, she said, were more pronounced for those at the lower end of wage distribution, who required more "enticement" from employers to return to less-compensated, face-to-face roles—bargaining power that was reinforced by the financial supports put in place by policymakers during the pandemic. Ahu Yildirmaz, President & Chief Executive Officer of the nonprofit Coleridge Initiative, which assists governments in using data for policymaking, said that the sectors where wages have kept up "not only faced intense competition for workers, but they also started from relatively lower wage levels." "That means percentage increases appear larger and more noticeable," he told Newsweek, adding that health care is a "bit of a special case," given funding support during the pandemic "helped reinforce wage gains, adding to the upward pressure." A trader works on the floor of the New York Stock Exchange, Monday, August 18, 2025. A welder carries steel at the site of a construction of a housing project, Thursday, July 31, 2025, in... A trader works on the floor of the New York Stock Exchange, Monday, August 18, 2025. A welder carries steel at the site of a construction of a housing project, Thursday, July 31, 2025, in Portland, Maine. More Richard Drew / Robert F. Bukaty/AP Photo In contrast, wages for those in manufacturing, professional and business services, financial activities and construction have slipped noticeably behind inflation. Education has fared the worst, with a 17.9 percent rise in pay trailing inflation by 4.8 percent. Educators have long suffered from the gap between income growth and inflation. According to the National Education Association's most recent annual report, average starting teacher salaries underwent their largest increase in 15 years in 2024. However, the labor union said that, when factoring in inflation, average teacher wages have "actually decreased by an estimated 5.1 percent over the past decade." "Education has lagged the most because even though teacher shortages persist, institutions face far more rigid pay structures," Yildirmaz told Newsweek. "School systems can't easily adjust prices or salaries in the way private employers can, so teacher pay scales tend to move slowly and remain constrained." Gould noted that the inability of wages to keep up has also been a function of the rapid inflation seen between 2020 and 2022, which reached an annualized rate of 9.1 percent in June 2022. This has been attributed to a mix of factors including pandemic-era supply chain shocks, post-lockdown demand surges, as well as the Russian invasion of Ukraine which drove up energy and food prices. What People Are Saying Martha Gimbel, executive director of the Yale Budget Lab, told Bankrate: "A wage increase is something you earn. Inflation is something that happens to you. It feels unfair to people that their hard-earned wage increase is getting eaten up by something that's not their fault." Ahu Yildirmaz, President & Chief Executive Officer of the Coleridge Initiative, told Newsweek: "Looking ahead, demographics and immigration will play a critical role in shaping labor supply. At the same time, the pace of AI adoption will influence demand. In service industries where human interaction is harder to automate wage pressure is likely to remain elevated. By contrast, in sectors more exposed to automation, wage growth may be more restrained." What Happens Next? Bankrate believes wage growth is on pace to match post-pandemic inflation by the third quarter of 2026, at which point its wage-to-inflation index will rise above zero. According to latest CPI report from the BLS, inflation accelerated 0.2 percent in July from June, and is up 2.7 percent on a 12-month basis. The core CPI, which excludes the volatile food and energy categories, increased by 0.3 percent for the month and is up 3.1 percent from a year ago. Most forecasts assume that inflation will remain broadly at this level for the remainder of 2025, the IMF forecasting annual inflation to hold steady at 3.0 percent on average this year. However, experts believe this will depend significantly on the extent to which the effects of President Donald Trump's tariffs are passed onto consumers.
