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CNET
26-05-2025
- Business
- CNET
Mortgage Rate Predictions for the Week of May 26- June 1, 2025
Mortgage rates can change daily and even hourly. Tharon Green/CNET Recently, I've been outlining how average mortgage rates are likely to remain above 6.5% for a while. Uncertainty over the impact of President Trump's economic policies has been causing daily volatility in the mortgage market. Last week, the average rate on a 30-year fixed mortgage climbed as high as 7.08%, according to data from Mortgage News Daily. Rates started the month around 6.75%. The big jump was due to rising Treasury yields in the bond market. The 30-year mortgage rate closely tracks the 10-year Treasury yield; when yields go up, lenders respond by setting higher rates for home loans. 'Treasury yields have been moving higher as a result of increasing headwinds in the economy, rising federal government debt levels and the recent downgrading of the US's credit rating by Moody's,' said Lisa Sturtevant, chief economist at Bright MLS. US Treasury bonds have traditionally been considered a safe haven during economic uncertainty, Sturtevant noted. However, investors have recently been pulling back from them due to perceived risk, causing bond prices to fall and yields to go up. Sturtevant said mortgage rates will likely remain near 7% or slightly higher in the near term. High mortgage rates and record-low affordability have plagued the housing market since 2022. But even those who can afford to buy in today's market are waiting. 'Growing uncertainty is going to make this a slower-than-typical spring housing market,' said Sturtevant. It's not only about the financial calculus but also the psychological impact of economic instability that holds prospective buyers back. 'When people are anxious, they are less likely to make big decisions, like buying and selling a home,' said Sturtevant. How tariffs are affecting mortgage rates Bond yields had already been on the rise even before last week, fueled by a combination of risk factors, including the impact of tariffs. Specifically, analysts expect domestic companies to pass expensive tariffs onto consumers in the form of higher retail prices, which would kick inflation back up. With the details of Trump's budget bill still being debated and tariffs negotiations are ongoing, we're likely to see more economic volatility over the coming weeks and months. Overall, prospective homebuyers should expect mortgage rates to remain elevated, with any dips likely to be small and temporary. 'It's a roller coaster that seems to be trending higher versus lower,' said Melissa Cohn, regional vice president at William Raveis Mortgage. 'Financial markets hate uncertainty. If it's not the budget, it's the tariffs.' Can mortgage rates still fall in 2025? While longer-term housing market forecasts call for a gradual decline in borrowing costs over the coming years, the potential for sub-6% mortgage rates in 2025 is slim. Financial experts caution that higher inflation due to Trump's tariffs could derail the Federal Reserve's anticipated rate cuts. Though the central bank doesn't directly set the rates on home loans, its monetary policy changes have a ripple effect on the housing market. Fed officials cut interest rates three times in 2024 because of slowing inflation, making borrowing costs slightly less restrictive. However, the Fed has been in a holding pattern since then, waiting to see the long-term implications of Trump's policies before it cuts rates again. Earlier in the year, market watchers expected as many as four or five rate cuts by the Fed in 2025. Now, the prospect of even one or two rate cuts is diminishing. 'The Fed's not going to do anything because now they have to continue to wait because of additional prolonged uncertainty,' said Cohn. Given where inflation and the economy are right now, markets are no longer predicting a rate cut this summer. 'However, the situation could change quickly if there are new announcements out of the Trump administration or if global economic conditions weaken,' said Sturtevant. In other words, unless there's a fresh downshift in the inflation trend or a sudden weakening of labor conditions, which would prompt the Fed to ease policy, mortgage rates will remain close to 7% for a while. Tips for navigating an uncertain housing market Mortgage rates haven't moved steadily in one direction over the last few months, and that shakiness is likely to continue, according to Hannah Jones, senior research analyst at If you're waiting for mortgage rates to come down before buying, keep in mind that the large-scale economic issues affecting the housing market are beyond your control. However, there are ways to bring down your individual mortgage rate. "With borrowing costs elevated, buyers can take steps to reduce their housing expenses by securing a lower mortgage rate," said Jones. For example, being financially prepared and shopping around for lenders can save borrowers up to 1.5% on their mortgage rate. Since each lender offers different rates and terms, comparing offers from multiple lenders can also help you negotiate a better rate. If you can't snag a low rate but are ready to buy, you can always refinance down the road. Jones said other strategies for lowering your mortgage rate include improving your credit score, making a larger down payment or choosing a more affordable home. When weighing the pros and cons of homeownership, experts recommend making a homebuying budget and sticking to it. Creating a realistic financial plan can help you decide if you can handle the costs of homeownership and provide you with some figures for how large your mortgage should be. Watch this: 6 Ways to Reduce Your Mortgage Interest Rate by 1% or More 02:31 More on today's housing market
Forbes
23-05-2025
- Business
- Forbes
Treasury Yields Top 5% And Could Rise More. Here's What To Do
'Sell America' could be the global catch-phrase for investors as tax cuts and rising defense spending add $2.4 trillion to the deficit — boosting treasury yields and pushing down the dollar. Traders work after the closing bell at the New York Stock Exchange (NYSE) on August 7, 2019 in New ... More York City. - Wall Street stocks finished little changed on August 7, 2019, following a choppy session as a plunge in treasury bond yields early in the day underscored worries about a weakening global economy. (Photo by Johannes EISELE / AFP) (Photo credit should read JOHANNES EISELE/AFP via Getty Images) A budget bill that could add $2.4 trillion to the national debt passed the House, noted the Washington Post. The 30-year treasury yield topped 5.1% after a $16 billion treasury bond auction failed to attract much interest, the Post reported. Mortgage rates surged to 7.08%, noted Mortgage News Daily. The price of gold climbed to $3,336 per ounce — near a record high, according to GoogleFinance. Investors are losing interest in America's long-term government securities — sending the 30-year treasury yield to 5.1%. The most recent force driving up that yield is the House passing a spending bill that could add $2.4 trillion to the national debt, reported the Washington Post. Why should investors care? The move raises interest rates for consumers — mortgage rates hit 7.08% — and for companies. Gold has resumed its upward climb and could top its record high. Long-term treasury rates could keep rising. How so? Foreign investors could continue selling the roughly $9 trillion in U.S. debt held overseas, according to the Post. Moreover, $14 trillion in U.S. debt maturing soon will be refinanced — likely at higher rates, noted CNBC. Higher interest rates and more debt service could push down the value of the dollar — compounding the inflationary effect of the Trump administration's tariffs for American consumers. When added to the higher prices caused by tariffs — including President Donald Trump's May 22 threat to impose 50% tariffs on goods exported from the European Union and warning of 25% tariffs on foreign-made Apple iPhones, according to the Wall Street Journal — the odds of a recession loom even higher. The so-called 'One Big, Beautiful Bill' would expand and make Trump's 2017 tax cuts permanent, producing 'an economic boom,' administration officials said, according to the Post. The bill would also add to the national debt and increase how much taxpayer money goes to paying interest on U.S. debt. The bill will add $2.4 trillion to the national debt by 2035, according to the Congressional Budget Office and boost the most recent fiscal year's unprecedented budget deficit of more than 6% of gross domestic product, noted the Post. Moreover, the bill will increase the more than $881 billion going to interest payments in 2024 — more than twice the 2021 figure — noted the CBO. The U.S. now spends more on interest 'than it does on national defense or Medicare,' wrote the Post. One rating agency anticipated the fiscal damage this bill might cause. Last week, Moody's 'stripped the U.S. of its last set of triple-A credit ratings, pointing to growing U.S. debt woes over at least a decade as a reason,' according to the Post. Investors expressed a loss of confidence in the U.S.' fiscal soundness. The result could force the Federal Reserve to choose between fighting inflation by raising rates or dampening a recession by cutting them. Meanwhile, analysts see a drop in the dollar and big challenges for investors seeking returns. Here are some examples: Given the murkiness and volatility accompanying the tariff wars and current fiscal policy, it is difficult to make solid predictions and imagine profitable investment ideas. Nevertheless, the current trajectory described above could lead gold prices to climb, U.S. interest rates to keep rising, and the dollar's value to decline. Meanwhile, one expert sees some emerging markets government bonds as strong options for investors looking to diversify away from U.S. treasuries in their fixed income portfolios. 'China's credit rating is A1 with a stable outlook, and [the U.S.-China 10-year] yield spread makes the former an interesting option despite the uncertain development of the import tariff exchange game,' London-based liquidity solutions provider B2BROKER's chief dealing officer John Murillo told CNBC. 'Several high-paced developing countries away from the prime rating league — like Indonesia and Malaysia — are en route to becoming particular beneficiaries of the current fixed income portfolio reshuffles. For example, a 10Y Indonesian sovereign bond offers approximately a 7% yield,' he added. If you do not buy such securities, you could put cash in a money-market fund, which would pay a higher yield should the Fed boost interest rates to fight inflation.
Yahoo
20-05-2025
- Business
- Yahoo
Investors shrug off Moody's downgrade as stocks, U.S. borrowing costs stay largely flat
Investors largely shrugged off a downgrade of the U.S.' credit rating in Monday trading, as stocks ended the day mostly flat. The Dow Jones Industrial Average added more than 130 points for an increase of 0.32%. The broader S&P closed up 0.09% and the tech-heavy Nasdaq gained 0.02%. Late Friday, Moody's became the third and final major ratings agency to downgrade U.S. debt, reducing it by one notch from AAA to Aa1. Credit ratings agencies help determine how reliably a country can pay off its debt. Yet the market for U.S. government debt has so far remained mostly stable. As of 4 p.m., the yield on the 10-year Treasury note — the government's benchmark loan asset — was only a few percentage points above where it traded Friday, climbing to 4.46%. That remans well below the most recent high of 4.59% briefly seen last month. 'The downgrade itself doesn't seem so far to have made much of a market splash,' analysts at the Capital Economics research consultancy wrote in a note. While the government's debt yield — or the percentage return demanded by investors for lending to it — briefly climbed Monday, the analysts said, 'the moves haven't been enormous.' They noted similar market reactions to the prior U.S. credit downgrades, which occurred in 2011 and 2023. While stock and bond buyers went largely unscathed Monday, home buyers now face higher mortgage costs as a result of the downgrade. The average rate on the popular 30-year fixed-rate loan hit as much as 7.04% on Monday, according to Mortgage News Daily. That was the highest level since April 11. 'The average mortgage lender had to account not only for the market movement in Friday's closing minutes, but also to the additional weakness seen this morning. That makes for a fairly big jump, day-over-day, but it does very little to change the bigger picture,' Matthew Graham, chief operating officer at Mortgage News Daily, said according to CNBC. In remarks accompanying its downgrade, Moody's said America's ability to control its balance sheet has eroded over the years, something that has forced yields higher. 'Successive U.S. administrations and Congress have failed to agree on measures to reverse the trend of large annual fiscal deficits and growing interest costs,' it said. 'We do not believe that material multi-year reductions in mandatory spending and deficits will result from current fiscal proposals under consideration.' But while Friday's downgrade garnered international headlines, individual stock buyers continue to prop up the market, helping to counterbalance the declines. These "retail" buyers, who are largely individual investors as opposed to larger firms like pension funds or hedge funds, have fueled the broader market recovery since President Donald Trump's shock "Liberation Day" tariffs announcement sent stocks tumbling. A popular investment instrument from Vanguard that has become a proxy for retail buying was flat Monday, suggesting there remained little appetite among retail traders for selling. The U.S. is by no means out of the woods. In the first place, the prior years' downgrades have done little to alter America's fiscal trajectory. Meanwhile, third-party budget experts like the Congressional Budget Office and the Penn Wharton Budget Model say the spending bill sought by Trump now working its way through Congress would likely fail to address the U.S.' predicament. As stocks wavered, one of the most prominent voices on Wall Street warned they are likely to go lower. According to CNBC, JP Morgan CEO Jamie Dimon told investors Monday that he believes the odds of stagflation in the U.S. economy, which he described as "basically a recession with inflation,' are roughly double what the market thinks — a scenario Dimon said will cause corporate earnings to decline. But in a call with reporters Monday, the White House dismissed concerns about the deficit, saying they fail to account for how much growth it says Trump's economic policies could generate and neglect what it says are ongoing government spending cuts by the Department of Government Efficiency and revenue streams from tariffs. Others remain unconvinced by that rosy picture. "In the short run, the U.S. is still the world's reserve currency and store of wealth," Mike Goosay, chief investment officer and global head of fixed income at Principal Asset Management financial group, wrote in a note to clients. "But the bigger issue is long-term," he continued. "If global investors start to question the U.S. role in the global order, that's when we could see real consequences." This article was originally published on Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
NBC News
19-05-2025
- Business
- NBC News
Investors shrug off Moody's downgrade as stocks, U.S. borrowing costs stay largely flat
Investors largely shrugged off a downgrade of the U.S.'s credit rating in Monday trading as stocks ended the day mostly flat. The Dow Jones Industrial Average added more than 130 points for an increase of 0.32%. The broader S&P closed up 0.09%. The tech-heavy Nasdaq gained 0.02%. Late Friday, Moody's became the third and final major ratings agency to downgrade U.S. debt, reducing it by one notch from AAA to Aa1. Credit ratings agencies help determine how reliably a country can pay off its debt. Yet the market for U.S. government debt has so far remained mostly stable. As of 4 p.m. the yield on the 10-year Treasury note — the government's benchmark loan asset — was only a few percentage points above where it traded Friday, climbing to 4.46%. That remans well below the most recent high of 4.59% briefly seen last month. 'The downgrade itself doesn't seem so far to have made much of a market splash,' analysts at the Capital Economics research consultancy wrote in a note. While the government's debt yield — or the percentage return demanded by investors for lending to it — briefly climbed Monday, the analysts said, 'the moves haven't been enormous.' They noted similar market reactions to the prior U.S. credit downgrades, which occurred in 2011 and 2023. While stock and bond buyers went largely unscathed Monday, home buyers now face higher mortgage costs as a result of the downgrade. The average rate on the popular 30-year fixed-rate loan hit as much as 7.04% on Monday, according to Mortgage News Daily. That was the highest level since April 11. 'The average mortgage lender had to account not only for the market movement in Friday's closing minutes, but also to the additional weakness seen this morning. That makes for a fairly big jump, day-over-day, but it does very little to change the bigger picture,' Matthew Graham, chief operating officer at Mortgage News Daily, said according to CNBC. In remarks accompanying its downgrade, Moody's said America's ability to control its balance sheet has eroded over the years, something that has forced yields higher. 'Successive U.S. administrations and Congress have failed to agree on measures to reverse the trend of large annual fiscal deficits and growing interest costs,' it said. 'We do not believe that material multi-year reductions in mandatory spending and deficits will result from current fiscal proposals under consideration.' But while Friday's downgrade garnered international headlines, individual stock buyers continue to prop up the market, helping to counterbalance the declines. These "retail" buyers, who are largely individual investors as opposed to larger firms like pension funds or hedge funds, have fueled the broader market recovery since President Donald Trump's shock "Liberation Day" tariffs announcement sent stocks tumbling. A popular investment instrument from Vanguard that has become a proxy for retail buying was flat Monday, suggesting there remained little appetite among retail traders for selling. The U.S. is by no means out of the woods. In the first place, the prior years' downgrades have done little to alter America's fiscal trajectory. Meanwhile, third-party budget experts like the Congressional Budget Office and the Penn Wharton Budget Model say the spending bill sought by Trump now working its way through Congress would likely fail to address the U.S.'s predicament. As stocks wavered, one of the most prominent voices on Wall Street warned they are likely to go lower. According to CNBC, JP Morgan CEO Jamie Dimon told investors Monday that he believes the odds of stagflation in the U.S. economy, which he described as "basically a recession with inflation,' are roughly double what the market thinks — a scenario Dimon said will cause corporate earnings to decline. But in a call with reporters Monday, the White House dismissed concerns about the deficit, saying they fail to account for how much growth it says Trump's economic policies could generate and neglect what it says are ongoing government spending cuts by the Department of Government Efficiency and revenue streams from tariffs. Others remain unconvinced by that rosy picture. "In the short run, the U.S. is still the world's reserve currency and store of wealth," Mike Goosay, Chief Investment Officer and Global Head of Fixed Income at Principal Asset Management financial group, wrote in a note to clients. "But the bigger issue is long-term. If global investors start to question the U.S. role in the global order, that's when we could see real consequences."
NBC News
11-04-2025
- Business
- NBC News
Mortgage rates surge over 7% as tariffs hit bond market
The average rate on the popular 30-year fixed mortgage surged 13 basis points Friday to 7.1%, according to Mortgage News Daily. That's the highest rate since mid-February. Mortgage rates have been on a roller coaster ride all week, as bond yields spiked higher mid-week when President Donald Trump's new tariffs on dozens of countries went into effect. Yields dropped when Trump lowered the tariff rate on most countries hours later. Tariffs on Chinese imports, however, currently stand at 145%. But bonds began selling off again Friday, despite a cooler-than-expected inflation report. Mortgage rates loosely follow the yield on the 10-year Treasury. 'There have been some bad weeks for bonds here and there over the careers of most anyone who's alive to read these words, but unless your career began before 1981, you just lived through the worst week you've ever seen in terms of the jump in 10-year yields,' said Matthew Graham, chief operating officer at Mortgage News Daily. Graham said there are two ways to look at where bonds are trading today: 'This is either the end of the worst week for 10-year yields since 1981 or the end of a fairly average two weeks that fit right in with the trend of the past 18 months.' On Friday, another monthly report on consumer sentiment came in substantially lower than expected. The expectation for inflation jumped from 5% in March to 6.7% in April, the highest level since 1981. All of this comes right in the heart of the all-important spring housing market. For most consumers, a home is their single largest investment. 'Forget about housing in this environment, with mortgage rates back up, consumers certainly concerned about the job market, housing will also be on the weak side,' said Nancy Lazar, chief global economist at Piper Sandler, on CNBC's 'The Exchange' on Friday.
