Latest news with #lenders
Yahoo
3 hours ago
- Automotive
- Yahoo
How does the Fed interest rate affect car loans?
Key takeaways Decisions made by the Federal Reserve to increase the benchmark rate do not directly impact auto loans but rather the cost for banks to lend. The higher the Fed sets rates, the higher auto loan rates will likely be. The Fed made its third and final cut of 2024 in December, bringing the new target rate to 4.25-4.5 percent. There was no change in the fed funds rate during the June 2025 meeting, and with inflation suspected to increase with the implementation of tariffs, a rate cut may not happen any time soon. Switch Auto Insurance and Save Today! Great Rates and Award-Winning Service The Insurance Savings You Expect Affordable Auto Insurance, Customized for You The Federal Reserve is a complex facet of the American economic system. The Fed determines how much it costs banks to borrow money at its eight or so meetings per year. One of its jobs is setting a benchmark interest rate for short-term consumer lending, which private lenders use to set their own rates. When the federal funds target rate is high, you can expect to pay more for a personal or auto loan. The opposite is also true, with a lower fed funds rate meaning lower average rates on consumer loans. How Fed rates affect auto loans Auto loan rates are dictated by the time of year, the type of vehicle, the borrower's credit score and more. But the Fed sets the benchmark rate on which auto loan lenders base their rates. The choices discussed by the Federal Open Market Committee (FOMC) during Fed meetings are not the exact interest rates consumers will be offered. Rather, they impact the cost for banks to lend to each other. Lenders may change offered rates when the federal funds rate changes because of this. When the Fed raises interest rates, auto loan rates may rise as well, and vice versa. June FOMC meeting The FOMC increased rates a total of 11 times from 2022 to 2023 in an effort to tamp down inflation. After inflation stabilized, the FOMC made three cuts at the end of 2024. The target range dropped to 4.25-4.5 percent. Throughout 2025, including the most recent June meeting, the Fed declined to change the fed funds rate, so it remains the same. However, this number does not control auto rates directly. Auto loan rates are primarily tied to the prime rate. The 11 rate increases since the beginning of 2022 mean that vehicle financing cost more money, but since then, rate decreases have meant a lower average auto loan rate through the end of 2024 and into 2025. Why Fed meetings are important Fed meetings are important because they allow anyone to have a transparent look into the economy — more specifically, the way interest rates change and are expected to shift. If the Fed announces that it is raising interest rates, you can expect to encounter more expensive loans or see interest rates rise on any variable-rate loans you already have. Learn more: Bankrate's Federal reserve hub While the Federal Reserve doesn't directly affect auto loan rates, what they do impact is the price of money. If the Fed is lowering rates, then the price of money is going down and, all else equal, borrowers can expect to see lower rates in the months ahead. The opposite is true as well, with the price of credit rising when the Fed increases benchmark interest rates. Greg McBride, Chief Financial Analyst, Bankrate The Federal Reserve has a direct line to your wallet. Every time the Fed meets to decide what to do with interest rates, its decisions ultimately impact how much you end up paying to finance big-ticket purchases, like homes and cars. Many Americans have been waiting for relief — on both the inflation and the interest rate front — but one won't happen without the other. Rates are unlikely to fall far enough, and fast enough, to offer borrowers major relief for the foreseeable future. Until then, it's the Americans who keep their credit score in tip-top shape, pay down debt, pay their bills on time and compare offers from multiple lenders who will find the best deals in a pricey borrowing environment. Sarah Foster, U.S. Economy Reporter and Analyst, Bankrate Caret Left Icon Caret Right Icon How to prepare for future Fed rate changes Preparation is the key to saving money. To be best prepared, educate yourself on the current federal funds rate and how shifting rates may impact your wallet. The federal funds rate and auto loan rates aren't the same, but a domino effect reaches the lenders, which then affects your rates. Although the current federal funds rate dictates the general range of auto loan rates available, your credit score is the primary factor in determining the amount you pay. To receive a loan with the most favorable terms, you must have a prime credit score, typically 660 and above, and good credit history. The federal funds rate is out of your control, but you can improve your credit score to prepare for future vehicle financing. Learn more: If you borrowed when interest rates were high, consider refinancing your auto loan Next steps When the Fed adjusts rates, available auto loan rates may also change. Although the Fed's decisions impact your auto loan, the rate you will receive is primarily determined by your financial history. Regardless of how the federal funds rate changes, set yourself up to save for the best auto loan rate by working to improve your credit score and finances. It's also good to keep up to date on current loan rates before applying for a new auto loan. 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
CBS News
13 hours ago
- Business
- CBS News
Best reverse mortgage lenders, plus top advice homeowners should know now
As retirement approaches, many homeowners find themselves asset-rich but cash-poor, with significant equity tied up in their homes while facing reduced income streams. And, that's especially true in today's inflationary environment, which is causing the costs of just about everything to rise, making it more difficult for retirees to ensure that their retirement funds will last as long as they need them to. In turn, senior homeowners are increasingly exploring the benefits of reverse mortgages, as these specialized loans allow them to tap into their home equity without the burden of monthly payments. The reverse mortgage landscape has evolved considerably in recent years, though, with both government-backed Home Equity Conversion Mortgages (HECMs) and private proprietary programs offering different advantages to qualified borrowers. And, as with any other type of borrowing product, not all reverse mortgage lenders offer the same terms, rates or level of service. So, if you're planning to take out a reverse mortgage, knowing which lenders excel in which areas can help you maximize the benefits while minimizing potential risks associated with these complex financial products. To help you get started, we've outlined a few standout reverse mortgage lenders below. We've organized them by what sets them apart so you can match a lender to your unique situation and goals. Start exploring your top reverse mortgage lenders here today. Here are some of the best reverse mortgage lenders broken down into five categories: Longbridge Financial is ideal for budget-conscious borrowers who are seeking a reverse mortgage with minimal upfront costs. It consistently offers some of the lowest interest rates in the industry and waives monthly servicing fees for many borrowers, which can help borrowers save significantly over the life of the loan. Longbridge also acts as its own loan servicer, ensuring you'll deal with the same company from application through repayment. This continuity can be a huge advantage if you want to avoid the confusion that comes when servicing rights are transferred to a third party. Plus, the lender provides an impressive library of educational resources, making it a great fit for first-time reverse mortgage borrowers who want to fully understand their options. Find out more about Longbridge here. American Advisors Group (AAG), which was recently acquired by Finance of America, is a dominant player in the reverse mortgage space, offering a wide range of federally insured HECMs as well as proprietary jumbo loans for high-value homes. This variety makes it an attractive choice for homeowners with different needs, whether they want a traditional HECM or need to access more equity than FHA limits allow. AAG also provides tailored options for receiving funds, including lump sums, monthly payouts and lines of credit, giving retirees flexibility to structure their loans in a way that fits their financial plans. Both AAG and FOA's strong reputations for customer service and AAG's extensive educational materials make this lender particularly appealing for those seeking a highly customizable experience. Guild Mortgage stands out for its ability to work with borrowers in unique situations, making it a strong option for homeowners who may not fit the traditional reverse mortgage mold or those looking for larger loan amounts than they could otherwise qualify for. That's because, alongside standard HECM loans, Guild offers proprietary reverse mortgage products designed for higher-value homes and borrowers looking for larger loan amounts than federal limits allow. That flexibility makes Guild an excellent choice for retirees with significant home equity or non-standard property types. The lender also provides multiple disbursement options, including lump sums, lines of credit and monthly payouts, so you can tailor your reverse mortgage to meet your financial goals. Fairway combines a national presence with the personalized touch of local branches, offering reverse mortgage options backed by high customer satisfaction ratings on third-party review sites. As a result, this lender may be particularly appealing for borrowers who prefer face-to-face lender interactions and hands-on guidance throughout the process. Fairway also has a highly rated mobile app for managing the reverse loans it issues, which bridges the gap between in-person service and digital convenience. One potential drawback is that Fairway may transfer loan servicing after closing, so if keeping your loan under one roof is a priority, you may want to ask about this up front. Find out more about Fairway here. Unlike direct lenders, Northwest Reverse Mortgage operates as a broker, connecting borrowers with multiple lenders and a wide range of products. This approach allows you to compare rates, terms, and fees across several options without doing all the legwork yourself. Northwest is especially useful if you're shopping for jumbo reverse mortgages or niche loan types like HECM for Purchase. However, Northwest's reverse mortgage services aren't available in all 50 states, so if you're interested in this lender, you'll need to confirm availability in your area. For homeowners who want a one-stop shop for exploring multiple offers, though, Northwest may offer a flexible, time-saving solution. While a reverse mortgage can be a smart way to cover your expenses during retirement, it's important to approach this type of borrowing carefully. Here's how you can do that: Reverse mortgages can unlock vital funds for retirement, but only if they align with your future plans and you find the right lending partner. So, choose a lender that excels where you need it most, whether that's low cost, support, digital ease or broad options. Most importantly, stay informed about costs, eligibility rules and how the loan fits into your long-term financial picture so you can take advantage of the financial flexibility this borrowing option offers without compromising your home or other benefits.
Bloomberg
17 hours ago
- Business
- Bloomberg
Third of Nigeria Banks Meet Capital Requirements Before Deadline
Nigeria's central bank said about a third of lenders have met its new capital requirements threshold ahead of a March deadline. 'Eight banks have fully met the recapitalization requirements, while others are making progress towards meeting the deadline,' Governor Olayemi Cardoso said at briefing in the capital, Abuja on Tuesday, to announce the central bank's interest-rate decision. The country has 26 commercial lenders, data on the central bank's website shows.
CBS News
19 hours ago
- Business
- CBS News
Are promotional HELOC offers worth considering now? Experts weigh in
Lenders looking to capture the interest of borrowers are rolling out promotional interest rates on home equity lines of credit (HELOCs) as a way to stand out in the current high-rate environment. Currently, average interest rates on a home equity line of credit (HELOC) are hovering around 8%. As the Federal Reserve continues its fight to lower inflation, interest rates on borrowing products remain elevated. While HELOC rates are still much lower than a credit card or personal loan, some lenders are offering below-average introductory rates, cashback incentives or waiving closing costs to entice borrowers to tap their home equity. While promotional HELOC offers can be appealing, they may have some strings attached. If you're not careful, it could cost you more in the long run. We spoke with various home equity borrowing experts on what to consider before taking advantage of a promotional HELOC in today's climate and how to decide if it's worth it. Start by seeing how low of a HELOC rate you'd be eligible for here. Promotional HELOC offers can help you qualify for a lower introductory rate for a set period, typically six to 12 months. For example, you could qualify for a low APR of 3.99% to 5.99% for the first six months. Some credit unions may even offer lower HELOC rates as part of an introductory offer. As part of the promotion, there may be no annual fees or closing costs. These enticing benefits can help get you in the door as a customer. As a borrower, taking advantage of a promotional HELOC offer can result in cost savings. Here's what to consider first: If you're shopping around and find a promotional HELOC offer, evaluate the benefits. What are you getting out of it as a borrower? It could be a lower introductory rate and/or no closing costs. How much do you stand to save compared to other HELOC offers? You'll want to weigh those benefits against any potential drawbacks, like loan minimums, prepayment penalties, or early termination fees. Some introductory rates may be compelling and offer obvious savings, whereas others may not be as competitive. You also want to think long-term when opening a HELOC and not just think about the short-term intro rate. "I think they first of all have to figure out what the most important feature is for them. Do you get a better rate with a 5-year line of credit than you do with a 10-year line of credit? But are you prepared to start paying it back in 5 years? Are there prepayment penalties?" says Melissa Cohn, the regional vice president of William Raveis Mortgage. Explore your current HELOC rate offers here to learn more. All good things come to an end — and that's true if you score a super low HELOC promo rate. The introductory rate could last six to 12 months, based on your loan agreement. Once the intro period is over, your HELOC rate could jump significantly. To avoid any costly surprises, understand exactly how and when your HELOC introductory rate will change. "Lenders are required to qualify you based on the fully indexed rate, not the teaser, which offers some protection. The key thing to look at with HELOCs is the margin. These loans are tied to prime plus a margin. So if prime is 7.5 percent and your margin is 2 percent, your actual rate is 9.5 percent. That is the rate you will be paying once the promo ends," says Jill Carrade, a mortgage broker at Pro Mortgage. Home equity line of credit borrowing can be a smart alternative to other borrowing options. Homeowners can tap into their built-in equity and score a lower rate, instead of turning to credit cards. But you're still borrowing money that you have to pay back. It's essential to know how you plan on using the funds and how you'll repay what you borrow. If you know you can pay off your HELOC quickly, a promotional HELOC offer can be a bonus, as long as there are no prepayment penalties. "Make sure your personal goals align with the product and purpose selected. If you are funding a short-term 12-month 100k kitchen renovation and know you'll get that bonus or cash windfall to pay a chunk off within a short time frame - take a low teaser rate and then pay the balance off before terms adjust or you hit the downside," says Christopher Thomas, a mortgage loan originator with Iris Mortgage. Promotional HELOC offers are attractive. In this high-rate environment, getting a low interest rate, even for a short period of time, can make a difference. It's crucial to read the fine print, however, so your cost-saving efforts don't backfire. "The other promotional item that a lot of home equity line providers offer is a waiving of closing costs," says Jason Lerner, branch manager at First Home Mortgage. "Typically, though, the fine print with that is that if someone repays their home equity line off or pays it down to 0 within a certain amount of time, or closes the account, often they have some type of prepayment penalty that then allows the lender offering the promotion to recoup some of those expenses." You also want to make sure you meet the eligibility requirements for the promotional HELOC. Some financial institutions may only offer these promotional HELOC rates to existing customers. If you're not a current customer, you may be roped into opening additional accounts. "Another practice is to require the consumer to open multiple other accounts in conjunction with the HELOC. The accounts could be credit cards, checking accounts and savings accounts. It is important to ask questions and thoroughly read all the paperwork," says Mark Worthington, a loan officer and branch manager at Churchill Mortgage. Learn more about opening a HELOC online here. Homeowners looking for financing may qualify for lower rates with a HELOC. Getting a promotional HELOC offer could provide even more savings, but only for a specific amount of time. It's key to read the fine print so you don't end up spending what you save on penalties or fees. Shop around and compare various options with different home lenders. "I would focus on comparing apples to apples as much as possible. Isolate the same rate and adjustable or fixed term. Then compare the APR, fees, fine print, and any early payoff penalties," says Thomas. You also want to be aware of potential repayment issues. HELOCs typically offer borrowers interest-only payments during the draw period. The rates are also subject to fluctuations as they're variable. Once you enter the repayment period, your monthly payments are likely to go up significantly. Some lenders may require a balloon payment when you hit the end of your loan term. If fixed payments are easier for you, you can also look into a home equity loan. Home equity loan interest rates stay the same throughout your repayment term, making payments more predictable. Before tapping any home equity, have a plan, do your research, and compare offers to find the best option for your situation.
Yahoo
20 hours ago
- Business
- Yahoo
KeyCorp Q2 profit rises on higher interest income and fees
(Refiles to fix formatting) By Atharva Singh (Reuters) -KeyCorp posted a 63% jump in its second-quarter profit on Tuesday, helped by increased interest income and a surge in investment banking fees. Lower deposit costs at regional lenders in the U.S., which are falling faster than the returns on assets, have helped keep profit margins steady and boosted net interest income, even as loan demand remains uneven. Net interest income — difference between earnings on loans and payments on deposits — jumped nearly 28% to $1.15 billion in the quarter. KeyCorp expects its NII to grow roughly 20-22% in 2025 compared to analysts' expectation of a near 22% jump. Peer lenders, including PNC Financial and Citizens Financial, posted higher quarterly profits last week, driven by improved fee income and stabilizing credit trends, though NII pressures remained in focus. Recent rate cuts and easing bond yields have prompted some U.S. banks to cut losses on low-yielding investment securities and redeploy funds into higher-yielding assets to improve returns and liquidity. KeyCorp used half of Scotiabank's capital injection last year to sell about $10 billion of its low-yield investments. The banks' investment banking and debt placement fees jumped over 41% to $178 million. "With 189 U.S. IPOs already priced this year, nearly double last year's pace, fee income is shifting from rounding error to rescue rope for balance sheets," said Michael Ashley Schulman, partner at Running Point Capital Advisors. "Capital-markets activity is no longer the lonely ATM in the lobby; KeyCorp and the regionals are hearing the ka-ching again," Schulman added. KeyCorp was a joint book runner on Hinge Health's IPO in May 2025. The Cleveland-based lender reported income from continuing operations of 35 cents per share, up from 25 cents per share, reported a year ago. Shares of the bank were up marginally in premarket trading.
