Finance

Mortgage rates drop to new low as Fed grows closer to slashing interest rates: Freddie Mac

Published

3 months ago

August 2, 2024

Business Finance News

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Mortgage rates dropped again this week to the lowest level since February, according to Freddie Mac. (iStock)

Mortgage rates dropped again this week to the lowest level since February in anticipation of the Federal Reserve cutting interest rates by 25 basis points in September, according to Freddie Mac.

The average 30-year fixed-rate mortgage was 6.73% for the week ending Aug. 1, according to Freddie Mac’s latest Primary Mortgage Market Survey. That’s a decrease from the previous week when it averaged 6.78% and lower than the 6.90% it was a year ago.

The average rate for a 15-year mortgage was 5.99%, down from 6.07% last week and down from 6.25% last year.

On Wednesday, Fed Chair Jerome Powell told reporters that the central bank has gained greater confidence that inflation is moving towards its 2% target rate, indicating that while rates were not lowered this time, they could soon be. Market expectations forecast a 25 basis point rate cut by the central bank’s September meeting. On Wednesday, the Mortgage Bankers Association said they anticipate two rate cuts this year, expecting inflation to continue to moderate.

However, an easing in the Fed’s interest rate policy and moderating home prices may not be enough to pull some homebuyers, currently sidelined by affordability issues, back into the market, according to Freddie Mac’s Chief Economist Sam Khater.

“Expectations of a Fed rate cut coupled with signs of cooling inflation bode well for the market, but apprehension in consumer confidence may prevent an immediate uptick as affordability challenges remain top of mind,” Khater said. “Despite this, a recent moderation in home price growth and increases in housing inventory are a welcoming sign for potential homebuyers.”

Homebuyers can find competitive mortgage rates by shopping around and comparing options. Visit an online marketplace like Credible to compare rates with multiple lenders at once.

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Home prices cool

The national median list price dipped from $445,000 in June to $439,950 in July, according to a new monthly housing report by Realtor.com. At the same time, the housing supply increased by 36.6%, a ninth straight month of growth, and now sits at a post-pandemic high.

Those two factors, combined with the prospect of lower interest rates – and potentially lower mortgage rates – should entice buyers back to the market. However, home prices remain near record highs and buyers waiting for more bargains in borrowing rates might not find them, according to Realtor.com Economist Jiayi Xu. A recent analysis from Realtor.com said that 86% of outstanding mortgage debt has a sub-6% rate, and more than three-quarters have a rate of 5% or lower—still significantly below where rates might end up this year.

“The housing market has been cooling in recent weeks, with stable prices, increasing listings, and longer time on market,” Xu said. “However, as home prices hover at or near record highs, affordability continues to be the top challenge. While the potential rate cut in September will be a good start to bring the rate down, subsequent drops in mortgage rates may not be as significant as many anticipated because the market is already pricing in rate cuts and such expectation is reflected by recent rate drops.”

If you’d like to see if you qualify for a mortgage based on your current credit score and salary, consider visiting Credible, where you can compare multiple mortgage lenders at once.

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Market tips in favor of buyers

A recent Zillow report said home sellers have had to cut their listing prices to entice buyers.

Roughly 24.5% of listings in June had a price cut, up from 23.8% the previous month. Market dynamics are shifting toward a pre-pandemic normal in terms of competition among buyers and their negotiating power, Zillow said.

“A growing segment of homes that aren’t competitively priced or well marketed are lingering on the market,” Zillow Chief Economist Skylar Olsen said. “Sellers are increasingly cutting prices to entice buyers struggling with affordability.”

“For years, the housing market has been defined by fast sales and few options,” Olsen continued. “Now it’s starting to look more like it did before the pandemic in terms of competition, if not costs. As the wait for mortgage rate relief drags on, slower price growth and even dips in some areas will help buyers catch up on saving for a down payment.”

If you are ready to shop for the best rate on a new mortgage, consider visiting an online marketplace like Credible to compare rates with multiple lenders at once.

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Have a finance-related question, but don’t know who to ask? Email The Credible Money Expert at [email protected] and your question might be answered by Credible in our Money Expert column.

Finance

After rejecting Google takeover, Wiz says will IPO when ‘stars align’

Published

1 hour ago

October 18, 2024

Business Finance News

Wiz co-founder discusses the company's expansion into the UK

LONDON — Cybersecurity firm Wiz is seeking to hit $1 billion of annual recurring revenues next year, the company’s billionaire co-founder Roy Reznik told CNBC, adding that the firm will go public “when the stars align.”

Wiz makes software that connects to cloud storage providers like Amazon Web Services or Microsoft Azure and scans for everything it stores in the cloud, helping organizations identify and remove risks in their cloud environments. It was founded by four Israeli friends while they served in 8200, the intelligence unit of Israel’s army, and most of Wiz’s engineering personnel are still based in Tel Aviv, Israel.

Earlier this year, the company rejected a $23-billion acquisition bid from Google, which would have marked the tech giant’s largest-ever takeover. At the time, Wiz CEO Assaf Rappaport said the startup was “flattered” by the offer, but would remain an independent company and aim to list instead.

Speaking with CNBC at Wiz’s new office space in London, Reznik said that the company has received offers from “many people that want to get their hands on Wiz stock” — but that, while “very flattering,” the firm still thinks it can do it alone by going public.

“We’ve already broken a few records as a private company, and we believe we can also break a few more records as an independent public company as well,” Reznik said.

Four-year-old Wiz has raised $1.9 billion in venture capital to date, including $1 billion secured this year in a funding round led by Andreessen Horowitz, Lightspeed Venture Partners and Thrive Capital at a valuation of $12 billion.

In 2022, Wiz said it had reached $100 million in annual recurring revenue (ARR), up from just $1 million in 18 months. At the time, the startup said it was “the fastest software company to achieve this feat.”

Reznik, who is the vice president of research and development at Wiz, said the firm now hopes to double from the $500 million of ARR it achieved this year and hit $1 billion in ARR in 2025, which CEO Rappaport cited as a key condition before the company goes public.

UK expansion

Wiz has been expanding its presence internationally, with a particular focus on Europe, from where it sources 35% of its revenues. Last month, the firm opened its first European office in London.

“I think the talent here is amazing, and the ecosystem is amazing,” Reznik told CNBC. “We have always been very much involved in Europe — and specifically the U.K. — and I feel like it’s a natural evolvement of Wiz to double down even more here in London and the U.K.”

The U.K. represents a major growth opportunity when it comes to cybersecurity, Reznik said, adding that recent events like the cyberattack on National Health Service hospitals and an incident affecting Transport for London have “roof topped” the level of interest in the kinds of products Wiz offers.

“The cloud market is going to reach $1 trillion over the next next few years,” Reznik, who moved from Israel to the U.K. just three months ago, told CNBC. “This year is going to be around $700 million, while security is just 4% out of that, I would say. So that makes it a $30 billion market, which is huge.”

Speaking about the U.K. market, Reznik said: “We see a lot of interest here. Many of the largest banks and retailers, are Wiz customers. But we’re also seeing a huge potential for growth.”

Wiz’s customers include online retailer ASOS and digital bank Revolut as customers in the U.K.