Latest news with #rate cuts
CNET
7 days ago
- Business
- CNET
Mortgage Predictions: With Fed Cuts on Hold, Where Do Rates Go From Here?
Buyers should keep an eye on the possibility of rate cuts in the next few months. Tharon Green/CNET The average rate for a 30-year fixed mortgage seems poised to hold near 6.75% for the rest of the year. Yet significant economic uncertainties could still push rates up or down in the coming months. Housing market experts consistently point to two major influences: the economic ramifications of the Trump administration's policies and the Federal Reserve's pace of interest rate cuts. On July 29-30, the Fed plans to keep borrowing rates the same at its fifth monetary policy meeting this year. Though markets currently expect a Fed cut in September, that's not a guarantee given ongoing political and economic instability. "Even a September move may require more definitive evidence that the economy is cooling," said Odeta Kushi, deputy chief economist at First American Financial Corporation. "For the housing market, it means the rate-cutting cycle many were hoping would ignite the 2025 homebuying season is still on hold." Although the central bank doesn't directly dictate mortgage rates, its policy decisions indirectly influence consumer borrowing costs, including for mortgages, over the long term. Mortgage rates, which are primarily tied to 10-year Treasury yields in the bond market, are also sensitive to other factors, including investor sentiment. Ultimately, it's unlikely that mortgage rates will shift significantly outside the 6.5% to 7% range unless the economy slows significantly or unemployment increases sharply. The problems afflicting the housing market will take time to solve. Apart from steep mortgage rates, high home prices and limited inventory have all but barred buyers from purchasing and owners from refinancing or selling. CNET How are tariffs affecting the Fed and mortgage rates? Following signs of slowing inflation in late 2024, the Fed implemented three interest rate cuts but has since adopted a more cautious wait-and-see approach this year. Policymakers have held interest rates steady amid market fluctuations, a stance it's expected to uphold at its Federal Open Market Committee meeting next week Today's complex economic picture presents a challenge for the Fed, which is tasked with maintaining maximum employment and containing inflation. The president has claimed that prices are low and the Fed should cut rates immediately. But tariffs, which are taxes on imported goods, are widely expected to drive up prices. We're already starting to see the effects: In June, inflation ticked up to 2.7%. While lower than markets expected, price growth is still well above the Fed's annual target rate of 2%. As a result, experts say the central bank has good reason to keep rate cuts on pause. "Increased uncertainty about the inflation picture lessens the chances of a cut in rates by the Fed," said Keith Gumbinger, vice president at "Greater inflation would argue against cutting rates, absent any significant deterioration in labor conditions." Fewer interest rate cuts combined with the recently passed budget bill, which is expected to significantly boost government debt deficits, are likely to keep upward pressure on longer-term bond yields and mortgage rates. But Kushi notes that "any changes, delays or confirmations around tariffs could swing investor sentiment and move yields." What would cause mortgage rates to fall? While most forecasts have average 30-year fixed mortgage rates holding above 6.5% through the end of the year, that could always change. The most recent jobs report appeared steady on the surface, yet several underlying indicators, including a rise in jobless claims, point to a weakening labor market. "Small businesses, which are often more vulnerable to shifts in trade policy and borrowing costs, are also dialing back hiring plans amid tariff concerns," Kushi said. If these trends eventually translate into higher unemployment, it would likely prompt the central bank to reduce borrowing costs. A weaker labor market would also drive bond yields and mortgage rates down. But if cheaper mortgages come as a result of an economic downturn, with households facing job losses, tighter budgets and financial instability, it could also keep buyers locked out What's happening in today's housing market? Affordability challenges have kept the housing market frozen for several years. Even as the long-standing housing shortage eases in several local markets and gives those buyers improved negotiating power, the rest remain locked out by steep home prices. Home sales fell to a nine-month low in June as the national median existing-home price jumped to a new high of $435,300. 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. 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
Reuters
7 days ago
- Business
- Reuters
Traders increasingly confident of September ECB pause, bond yields rise
LONDON, July 24 (Reuters) - Traders grew more convinced the European Central Bank's next move will be a pause on Thursday as signs of an EU-U.S. trade deal nearing and the ECB sounding relatively upbeat on the economic outlook reduced bets on further rate cuts. Money markets now price in less than a 30% chance of a 25 basis-point rate cut when the ECB meets next on September 11. That was closer to 50% on Wednesday, before news broke that the European Union and the United States were heading towards a deal that would result in a broad tariff of 15% applying to EU goods. The ECB, which kept rates on hold after eight cuts over the last year that halved its policy rate to 2%, fuelled the move further. With the ECB expected to pause on Thursday, analysts said it was President Christine Lagarde's focus on holding rates that boosted confidence in a September pause. At the ECB's post-meeting news conference, Lagarde stressed the ECB was in a "good place" in terms of policy, while downplaying the risk of an inflation undershoot next year and noting that supply bottlenecks and trade disruption caused by tariffs could also emerge as inflationary. "Perhaps it was the lack of the use of the word pause and she described rates as on hold and decision by decision," said Dean Turner, an economist at UBS Wealth Management. Two-year German bond yields , sensitive to interest rate expectations, rose by more than 10 basis points to 1.90%, heading for their largest one-day rise since mid-May. Its 10-year yield , the benchmark for the euro area, was up similarly. The euro reversed an earlier fall against the dollar and was last up 0.1% at around $1.179 European shares slightly pared gains following Lagarde's remarks. The region-wide STOXX 600 was last up around 0.2% versus around 0.4% before the ECB announced its policy decision (.STOXX), opens new tab. A 15% tariff would be only half the 30% rate U.S. President Donald Trump had threatened to impose on the EU earlier in July. If it materialises it also takes out the ECB's worst case scenario, which had pencilled in a 20% tariff. "She's a bit hawkish," said Arne Petimezas, director of research at AFS Group, said of Lagarde. "She downplayed the undershooting of inflation in 2026 and she said growth is a bit better than expected."
Bloomberg
18-07-2025
- Business
- Bloomberg
Weak Credit Growth And Rate Cuts to Squeeze Profit at India's HDFC, ICICI Banks
India's top private-sector banks HDFC Bank Ltd. and ICICI Bank Ltd. could see profits come under pressure from loan growth at a three-year low and thinning margins driven by central bank rate cuts, as they report earnings this weekend. Margins face pressure from the Reserve Bank of India's rate cuts — 100 basis points since the start of the year — and a reduction of the cash reserve ratio to boost liquidity and further reduce funding costs in order to buoy the economy.
CNET
14-07-2025
- Business
- CNET
Mortgage Rate Predictions: Here's Why Rates Are Staying High in July
Buyers should keep an eye on the possibility of rate cuts in the next few months. Tharon Green/CNET After the rate on a 30-year fixed mortgage dipped to around 6.7% (its lowest level in months), prospective homebuyers jumped to take advantage. Before the July 4 holiday weekend, mortgage loan applications increased 9.4% week over week, per the Mortgage Bankers Association. Homeowners also seized on refinancing, with refinance activity 56% higher than the same time last year. But the reprieve didn't last long. On Monday, average 30-year fixed rates were back around 6.76%, according to Bankrate data. The culprit was last month's stronger-than-expected jobs report, released July 3, which sent bond yields up. Since the 30-year mortgage rate closely tracks the 10-year Treasury yield, rising bond yields translate to higher rates for home loans. Last month's surprisingly low unemployment rate also reduced the probability of an interest rate cut by the Federal Reserve this summer. "The headline labor market data isn't crashing and burning, which likely gives the Fed some cover to hold rates where they are," said Alex Thomas, senior analyst at John Burns Research and Consulting. While the Fed doesn't have direct control over the mortgage market, its monetary policy guides mortgage lenders and the general direction of interest rates. Experts say average 30-year fixed mortgage rates are likely to stay above 6.5% in the coming months, with a potential for small and temporary dips, not substantial drops. Prospective homebuyers are also contending with a long-standing housing shortage, high home prices and a loss of purchasing power. CNET What's driving mortgage interest rates this week? Mortgage rates, which are sensitive to investor speculation and economic data, have been affected by the Trump administration's tax cuts and tariff policies. If tariffs end up raising prices as expected, that would send an even clearer "wait and see" signal to central bank policymakers, whose primary task is keeping both inflation and unemployment in check. "Increased uncertainty about the inflation picture lessens the chances of a cut in rates by the Fed," said Keith Gumbinger, vice president at "Greater inflation would argue against cutting rates, absent any significant deterioration in labor conditions." Following signs of cooler inflation in 2024, the Fed cut interest rates three times but has held rates steady throughout 2025. A slowing job market with higher unemployment could still prompt the central bank to reduce borrowing costs this year, eventually helping mortgage rates fall. But the most recent jobs report appeared too steady on the surface, according to Odeta Kushi, deputy chief economist at First American Financial Corporation. "For the Fed, this reduces the urgency to cut rates in July. Even a September move may require more definitive evidence that the economy is cooling," Kushi said. Fewer interest rate cuts combined with the recently passed budget bill, which is expected to significantly boost government debt deficits, are likely to keep upward pressure on longer-term bond yields and mortgage rates. What's happening today's housing market? Affordability challenges have kept the housing market frozen for several years. Even as the long-standing housing shortage eases in several local markets and gives those buyers improved negotiating power, the rest remain locked out by steep home prices. The 2025 homebuying season is still on hold, said Kushi. 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. 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
Bloomberg
10-07-2025
- Business
- Bloomberg
Banxico Signals Pace of Mexico Monetary Easing Likely to Slow
Mexico's central bank signaled that the pace of interest rate cuts is likely to slow after last month's half percentage-point reduction. Two of the five-member board argued that the June move should be the last of that size during the current easing phase, according to the minutes of the meeting published Thursday.
