Latest news with #BethAnnBovino
CNET
17 hours ago
- Business
- CNET
Mortgage Rate Forecast Clouded by War Moves, Tariffs and the Federal Reserve
Buyers should keep an eye on the possibility of rate cuts in the next few months. Tharon Green/CNET The housing market is hardly immune to political and economic volatility, yet mortgage rates have been eerily calm over the last period. Since the spring, the average rate for a 30-year fixed mortgage has moved in a mostly narrow range around 6.8% and 7%. Mortgage rates were expected to gradually improve in 2025. However, the Trump administration's inflationary tariffs, deficit spending and geopolitical maneuvering led to bleaker forecasts, including fewer interest rate cuts by the Federal Reserve. The Mortgage Bankers Association now predicts that mortgage rates will decline only slightly to 6.7% by the end of the year. "You'd need to see mortgage rates pretty far below current levels, certainly below 6.75%, to incentivize homebuyers," said Beth Ann Bovino, chief economist at U.S. Bank. Economists were also monitoring how a war in the Middle East could spark fresh volatility across global markets, significantly affecting oil prices and the US dollar, which would have a ripple effect on long-term Treasury yields and mortgage rates. However, with the Israel-US-Iran ceasefire holding steady for now, rates haven't undergone major fluctuations. Logan Mohtashami, lead analyst of Housing Wire, said that traders mostly saw the bombing of Iran's nuclear facilities as a short-term event, muting the impact on mortgage rates. In the coming weeks, housing market experts will be assessing the potential for another military escalation, oil prices and how the Fed responds to labor market data and recession risks. If any of these variables lead to a downward trend in home loan rates, more buyers may come off the sidelines. CNET Fed interest rate cut still projected for fall Despite widespread pleas for lower consumer borrowing costs, including from the White House, the Fed held interest rates steady for the fourth consecutive time this year at its monetary policy meeting on June 18. While two Fed officials this week floated the possibility of a July cut, the market largely projects an interest rate cut in September. Fed Chair Jerome Powell has reaffirmed a "wait and see" posture, with concerns over the inflationary impact of tariffs. The Fed is tasked with maintaining maximum employment and containing inflation, primarily through setting its short-term benchmark interest rate for lenders. A sluggish economy typically warrants interest rate cuts to stimulate growth, but lowering rates too quickly could fuel price growth when inflation is still above target. Monetary policy changes by the Fed influence overall borrowing rates, though it's not a one-to-one relationship with home loans. In 2024, the central bank cut interest rates three times, but mortgage rates didn't fall. Mortgage rates are primarily driven by movement in the bond market, specifically the 10-year Treasury yield. Bond yields and interest rates rise or fall depending on how inflation and labor data shift investor speculation and risk assessment. How war and tariffs impact mortgage rates Since mortgage rates are highly sensitive to fiscal policy and supply chain shocks, a global trade war and a military war with Iran could impact the direction of mortgage rates in either direction. For example, if inflation increases due to tariff policies or a surge in energy costs, mortgage rates could increase. "Even though many of the tariffs are in place, some of the big ones have yet to take effect," said Bovino. The average household in the US is expected to lose about $3,000 in income from tariffs, with lower-income households getting hit even harder, according to Bovino. Conversely, a prolonged conflict in the Middle East could also spark fear of a downturn and propel investors to buy government-backed investments like US Treasury bonds. During heightened geopolitical turmoil, increased demand for "safe-haven" bonds can drive prices up and yields down, temporarily pushing mortgage rates lower. However, a brief confrontation of air strikes is not the same as a sustained battle with boots on the ground, according to Matt Graham of Mortgage News Daily. The bigger the US involvement, the higher the implications for the market. "While it's true that major geopolitical conflicts historically have a positive connotation for interest rates, that reaction can be tempered or even counteracted by a variety of factors," Graham said in an email. If the geopolitical conflict has a negative impact on inflation due to a spike in oil prices, for example, that can offset bond demand. Coping with an unaffordable housing market Major affordability challenges resulted in another inactive spring homebuying season. Even as the long-standing housing shortage eases in several local markets and gives some buyers improved negotiating power, the rest remain locked out by steep home prices. "Prices are still incredibly high," Bovino said. "Add to that the borrowing costs of a mortgage, and it's prohibitively expensive for most people to get into the housing market." Plus, with recession risks still on the horizon, people who are nervous about finances will be more reluctant to take on mortgage loan debt. Prospective buyers waiting for mortgage rates to drop may soon have to adjust to the "higher for longer" rate environment, with mortgage rates fluctuating between 5% and 7% over the longer term. While market forces are out of your control, there are ways to make buying a home slightly more affordable. Last year, nearly half of all homebuyers secured a mortgage rate below 5%, according to Zillow. Here are some proven strategies that can help you save up to 1.5% on your mortgage rate. 💰 Build your credit score. Your credit score will help determine whether you qualify for a mortgage and at what interest rate. A credit score of 740 or higher will help you qualify for a lower rate. 💰 Save for a bigger down payment. A larger down payment allows you to take out a smaller mortgage and get a lower interest rate from your lender. If you can afford it, a down payment of at least 20% will also eliminate private mortgage insurance. 💰 Shop for mortgage lenders. Comparing loan offers from multiple mortgage lenders can help you negotiate a better rate. Experts recommend getting at least two to three loan estimates from different lenders. 💰 Consider mortgage points. You can get a lower mortgage rate by buying mortgage points, with each point costing 1% of the total loan amount. One mortgage point equals a 0.25% decrease in your mortgage rate. Watch this: 6 Ways to Reduce Your Mortgage Interest Rate by 1% or More 02:31
CNET
4 days ago
- Business
- CNET
Weekly Mortgage Rate Forecast for June 23-29, 2025
Tharon Green/CNET Though the housing market is never immune to political and economic volatility, mortgage rates have been eerily calm. Over the last month, the average rate for a 30-year fixed mortgage has moved in a narrow range between 6.8% and 7%. An escalating war in the Middle East could spark fresh volatility across global markets, significantly affecting oil prices and the US dollar. That would have a ripple effect on long-term Treasury yields and mortgage rates. Mortgage rates had been expected to gradually improve in 2025, but the Trump administration's inflationary tariffs, deficit spending and geopolitical maneuvering led to bleaker forecasts. Most economists now say average mortgage rates will stay above 6.5% for the better part of the year, keeping many prospective homeowners away. "You'd need to see mortgage rates pretty far below current levels, certainly below 6.75%, to incentivize homebuyers," said Beth Ann Bovino, chief economist at U.S. Bank. CNET Fed rate cuts still on the agenda Despite widespread pleas for lower consumer borrowing costs, including from the White House, the Federal Reserve held interest rates steady again at its monetary policy meeting on June 18. The prolonged pause in rate cuts gives the central bank some time to assess numerous wild cards: the labor market, price growth and an evolving conflict with Iran. The Fed is tasked with maintaining maximum employment and containing inflation, primarily through setting its short-term benchmark interest rate for lenders. A sluggish economy typically warrants interest rate cuts to stimulate growth, but lowering rates too quickly could fuel price growth when inflation is still above target. The central bank could cut rates as early as this fall, especially if rising jobless claims and slowing economic growth force its hand. At the same time, other factors, including the current conflict in the Middle East, could quash hopes of rate cuts, pushing them off until next year. Monetary policy changes by the Fed influence overall borrowing rates, though it's not a one-to-one relationship with home loans. In 2024, the central bank cut interest rates three times, but mortgage rates didn't fall. Mortgage rates are primarily driven by movement in the bond market, specifically the 10-year Treasury yield. Bond yields and interest rates rise or fall depending on how inflation and labor data shift investor speculation and risk assessment. The impact of tariffs and war on mortgage rates A significant concern is how a global trade war and a prolonged military war in the Middle East could impact interest rates and the housing market. Mortgage rates are highly sensitive to fiscal policy and supply chain shocks. If inflation increases due to tariff policies or a surge in energy costs, mortgage rates could increase. "Even though many of the tariffs are in place, some of the big ones have yet to take effect," said Bovino. The average household in the US is expected to lose about $3,000 in income from tariffs, with lower-income households getting hit even harder, according to Bovino. On the flip side, the Israel-Iran-US conflict could spark fear of a downturn and propel investors to buy safer investments like US Treasury bonds. During periods of heightened geopolitical turmoil, increased demand for bonds can drive prices up and yields down, temporarily pushing mortgage rates lower. Neither scenario would be positive news. When households are nervous about their finances, they'll be more reluctant to make huge purchases and take on new debt. Adjusting to an unaffordable housing market Major affordability challenges resulted in another inactive spring homebuying season. Even as the long-standing housing shortage eases in several local markets and gives some buyers improved negotiating power, the rest remain locked out by steep home prices. "Prices are still incredibly high," Bovino said. "Add to that the borrowing costs of a mortgage, and it's prohibitively expensive for most people to get into the housing market." Prospective buyers waiting for mortgage rates to drop may soon have to adjust to the "higher for longer" rate environment, with mortgage loan rates fluctuating between 5% and 7% over the longer term. While market forces are out of your control, there are ways to make buying a home slightly more affordable. Last year, nearly half of all homebuyers secured a mortgage rate below 5%, according to Zillow. Here are some proven strategies that can help you save up to 1.5% on your mortgage rate. 💰 Build your credit score. Your credit score will help determine whether you qualify for a mortgage and at what interest rate. A credit score of 740 or higher will help you qualify for a lower rate. 💰 Save for a bigger down payment. A larger down payment allows you to take out a smaller mortgage and get a lower interest rate from your lender. If you can afford it, a down payment of at least 20% will also eliminate private mortgage insurance. 💰 Shop for mortgage lenders. Comparing loan offers from multiple mortgage lenders can help you negotiate a better rate. Experts recommend getting at least two to three loan estimates from different lenders. 💰 Consider mortgage points. You can get a lower mortgage rate by buying mortgage points, with each point costing 1% of the total loan amount. One mortgage point equals a 0.25% decrease in your mortgage rate. Now Playing: 6 Ways to Reduce Your Mortgage Interest Rate by 1% or More 02:31
Yahoo
27-01-2025
- Business
- Yahoo
Is Snap Inc. (SNAP) The Best Stock To Buy In Falling Markets Now?
We recently compiled a list of the . In this article, we are going to take a look at where Snap Inc. (NYSE:SNAP) stands against the other stocks. Even though the year 2024 was not kind to certain sectors within the US economy, the broader outlook for the stock market heading into the new year was more than rosy. Investment banks generally anticipated moderate economic growth for the US in 2025. For example, Deutsche Bank forecasts a growth rate of approximately 2%, noting that 2025 will not be a year of rapid GDP growth. Meanwhile, JP Morgan's Global Investment Strategy team emphasized a foundation of strength stemming from 2024's robust market returns. They highlighted themes such as easing global policies and rising capital investment as key drivers for the coming year. Their report, Outlook 2025: Building on Strength, suggested that the US economy was well-positioned to capitalize on these favorable conditions. Read more about these developments by accessing 10 Best AI Data Center Stocks and 10 Buzzing AI Stocks According to Goldman Sachs. However, inflation remained a focal point in economic discussions. Top economic experts project that inflation rates will decelerate in 2025, approaching the Federal Reserve's 2% target by the second half of the year. This outlook suggests a stabilization of price levels, which could influence monetary policy decisions. US Bank Chief Economist Beth Ann Bovino offered insights into the Federal Reserve's anticipated actions. She predicted that the Fed would implement two interest rate cuts in 2025, citing continued economic strength. Bovino also noted that proposed tariffs and tax cuts by the new administration could exert additional inflationary pressures, potentially complicating the Fed's policy decisions. The fiscal policies of the new administration are expected to play a significant role in shaping the economic landscape. Bank of America analysts Claudio Irigoyen and Aditya Bhave discussed the interplay between US policy changes and the global economy. They anticipated that fiscal policy would be expansionary through tax cuts and acknowledged that proposed tariff increases could have a modest impact on consumer price inflation. Their analysis underscored the importance of balancing growth initiatives with inflation control. In terms of sector performance, Standard Chartered Bank expressed optimism about equities and commodities. Entering 2025, the bank was overweight in equities and gold, citing a resilient global economy with a projected GDP growth of 3%. Read more about these developments by accessing 30 Most Important AI Stocks According to BlackRock and Beyond the Tech Giants: 35 Non-Tech AI Opportunities. To make our list of the best stocks in falling markets, we first made a list of stocks that have lost 15% or more over the past 12 months and are in the telecommunications, technology, or software infrastructure industries. Then, we picked the stocks that had the highest number of hedge fund investors in Q3 2024 courtesy of Insider Monkey's database of hedge funds. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter's strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here). A young adult family using a Camera to record moments of their daily life. Number of Hedge Fund Holders: 34 Decline in Share Price Over Past 12 Months: 33.6% Snap Inc. (NYSE:SNAP) is a technology company that believes that cameras present the greatest opportunity to improve the way people live and communicate. This company presents a solid investment opportunity, supported by the following points. Firstly, as per the report for the third report of 2024, total revenue was $1,373 million, compared to $1,189 million in the prior year, reflecting an increase of 15% year-over-year. This growth indicates that the company experienced higher sales, suggesting strong business performance and improved revenue generation over the past year. Secondly, the company has announced the fifth generation of Spectacles that enables users to use Lenses and experience the world together with friends in totally new ways. Spectacles are powered by Snap OS, a brand-new and groundbreaking operating system designed to enhance how people naturally interact with the world. Overall SNAP ranks 9th on our list of the stocks to buy in falling markets now. While we acknowledge the potential of SNAP as an investment, our conviction lies in the belief that some stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a stock that is more promising than SNAP but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock. READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap Disclosure: None. This article is originally published at Insider Monkey. Sign in to access your portfolio
