Finance
Mortgage rates dropped this week, but mortgage applications also declined
Mortgage rates dropped to 6.79% for 30-year mortgages. (iStock)
Mortgage rates continued their slight decline this week, Freddie Mac reported. For 30-year fixed-rate mortgages, the average interest rate is 6.79%, down from last week’s average of 6.87%.
Last year at this time, mortgage rates for 30-year mortgages averaged closer to the bottom of the 6% range at 6.35%.
“Mortgage rates moved slightly lower this week, providing a bit more room in the budgets of some prospective homebuyers,” Sam Khater, Freddie Mac’s Chief Economist, said.
“We also are seeing encouraging data on existing home sales, which reflects improving inventory. Regardless, rates remain elevated near seven percent as markets watch for signs of cooling inflation, hoping that rates will come down further.”
For 15-year mortgages, rates have also dropped since last week and now average 6.11% for fixed-rate mortgages. This is higher than last year’s average of 5.56%.
If you’re looking to purchase a home in today’s market, you can explore your mortgage options by visiting Credible where you can compare rates and lenders with a click of a button.
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Mortgage applications stalled this week
While rates are dropping, buyers aren’t yet fully committed to buying. Mortgage applications decreased 0.7% from a week earlier, according to the Mortgage Bankers Association’s (MBA) weekly survey.
Compared to a year ago, MBA’s unadjusted Purchase Index was 16% lower, signaling a struggle to keep buyers in the market.
“Mortgage application activity was muted last week despite slightly lower mortgage rates. The 30-year fixed rate edged lower…but that was not enough to stimulate borrower demand,” Joel Kan, the MBA’s vice president and deputy chief economist, said.
“Purchase applications were essentially unchanged, as homebuyers continue to hold out for lower mortgage rates and for more listings to hit the market.”
Earlier in the year, it was predicted that rates would finally drop below 6%, which is now unlikely at this point.
“Lower rates should help to free up additional inventory as the lock-in effect is reduced, but we expect that will only take place gradually… Similarly, with rates remaining elevated, there is very little incentive right now for rate/term refinances,” Kan said.
Looking to get a mortgage? Credible can help you compare multiple mortgage lenders at once.
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It’s cheaper to rent than buy in all 50 major metro areas in the U.S.
It’s officially become cheaper to rent than to buy in many of the country’s major metro areas. A recent report from Realtor.com revealed that a starter home is more affordable than buying one in the 50 largest metros.
In February 2024, the average monthly cost of buying a starter home was $1,027, which is 60.1% higher than the average cost of renting.
Although the rental market appears hot, the U.S. median rent declined year-over-year, according to Realtor.com. For studio to two-bedroom units, rent declined 0.4% within the top 50 metros. This is the seventh month in a row that rent has declined.
One of the top markets where it’s more affordable to rent is in Austin, Texas. The cost of buying a home in Austin averaged $3,695 per month, 141.5% more than the average monthly rent. Renting in Austin costs $1,530 per month, on average.
Seattle is another area where buying is more expensive than renting. The average cost to buy is $4,422 while the average renter pays $2,000 per month.
If you think you’re ready to shop around for a home loan, consider using Credible to help you easily compare interest rates from multiple lenders and get a pre-approval letter in minutes.
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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.
The bitcoin rally is generating a false sense of security among investors, according to the strategist behind the so-called granddaddy of gold exchange-traded funds.
State Street Global Advisors’ George Milling-Stanley warns cryptocurrency plays don’t offer the stability of gold.
“Bitcoin, pure and simple, it’s a return play, and I think that people have been jumping onto the return plays,” the firm’s chief gold strategist said on CNBC’s “ETF Edge” this week.
Milling-Stanley’s comments came as his firm’s SPDR Gold Shares ETF (GLD) celebrated its 20-year anniversary this week. It is the world’s largest physically backed gold ETF, and it’s up more than 30% in 2024.
“Gold was $450 an ounce [20 years ago],” said Milling-Stanley. “It’s now five times what that price was then. If you look at a five-times price, then gold should be somewhere over $100,000 in twenty years’ time.”
Gold just had its best weekly performance since March 2023. Gold futures settled at $2,712.20 on Friday, the highest settle since Nov. 5. Gold prices are now just 3% below the record high hit on Oct. 30.
Bitcoin, which has surged since the Nov. 5 election, is having a banner year, too. It hit an all-time high on Friday.
Milling-Stanley thinks investors who treasure gold’s safety qualities should reconsider piling into bitcoin. He suggests the crypto world is trying to manipulate them.
“This is why they [bitcoin promoters] called it mining. There’s no mining involved. This is a computer operation, pure and simple,” he said. “But they called it mining because they wanted to seem like gold — maybe take some of the aura away from the gold.”
Yet, he acknowledges it is unclear how high the yellow metal can actually go.
“I have no idea what’s going to happen over the next 20 years except it’s going to be a fun ride,” Milling-Stanley said. “I think that gold is going to do well.”
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Americans are retiring at a record-setting pace amid the aging of the baby boomer generation, and exchange-traded funds (ETFs) have become a popular way for retirees to invest in ways that align with their risk tolerance and diversification needs.
A recent report by the Alliance for Lifetime Income found that about 4.1 million Americans are projected to turn 65 on an annual basis from 2024 through 2025. That has pushed the number of Americans turning 65 each day from roughly 10,000 in the past decade to more than 11,200 this year.
ETFs can offer investors access to a variety of investment themes of interest to retirees, from equity ETFs optimized for dividend yields to bond ETFs yielding interest on government and corporate debt, as well as those modeled on broader indices like the S&P 500 or that have international exposure. Some can also include built-in hedging strategies to guard against downside risk.
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“Investments are personal, and the ‘best’ ETFs for someone in or near retirement can vary widely, depending on their situation. Those in or near retirement should evaluate their situation in terms of their overall allocation, the time horizon for drawing down or growing their assets, and what level of risk they’re comfortable with,” said Lawrence Sprung, CFP and founder of Mitlin Financial.
Retirees can use ETFs to deliver income in retirement by targeting dividend or interest-paying ETFs, or use them to diversify their portfolios. (iStock / iStock)
“Investors that have a higher risk level and longer time horizon will be included to invest in more growth-oriented ETFs. On the other hand, investors who require income today from these assets with a lower risk tolerance will have their portfolios allocated more toward income-oriented investments,” Sprung added. “The ETFs that may be best for one investor may not be the best for another.”
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ETFs can be broadly diversified or may be narrowly focused on a certain part of the market. (Angela Weiss / AFP for Getty Images / Getty Images)
Some ETFs offer retirees and future retirees some downside risk protection, said Faron Daugs, the CEO of Harrison Wallace Financial Group.
“Often, these are referred to as buffered ETFs. They are generally tied to a stock market index and have various downside percentage protection in the event of a downturn in the market,” he said. “This type of ETF allows you to participate in potential growth opportunities but offers individuals a little bit of a parachute in the event of a downturn.”
“Another option to consider would be an ETF that invests in dividend-producing stocks. Typically, having a portfolio can generate you a return via a dividend, regardless of the stock performance, can serve as an attractive way to gain some growth potential and offer potential for return in some form – even if the price of the stock declines,” Daugs added.
ETFs can help investors diversify their portfolios by targeting specific types of assets more efficiently. (iStock / iStock)
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If a retiree needs income during their golden years, an ETF that pays dividends or interest can be a wise investment, said Ted Jenkin, co-founder and consultant at oXYGen Financial.
“SPDR Portfolio S&P 500 High Dividend ETF (SPYD), Vanguard Dividend Appreciation Index Fund ETF Shares (VIG) and iShares Select Dividend ETF (DVY) are just a few to look at,” he said.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| SPYD | SPDR® PORTFOLIO S&P 500® HIGH DIVIDEND ETF – USD DIS | 46.40 | +0.53 | +1.16% |
| VIG | VANGUARD SPECIALIZED FUNDS DIVIDEND APPRECIATION ETF | 201.00 | +2.26 | +1.14% |
| DIVY | TIDAL ETF TRUST SOUND EQUITY DIV INC ETF | 26.88 | +0.11 | +0.40% |
Jared Levy, chief markets strategist at Peak American Financial, said that investors should be “extremely precise the closer they get to retirement” because they typically are shifting from “prioritizing growth to prioritizing protection.” Levy added that it’s “critical to have an all-weather portfolio that is not only balanced for your risk tolerance, but one that doesn’t become correlated if things start to fall apart.”
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He said that one of his firm’s all-weather portfolios features the Protected S&P 500 ETF (BUFR) along with a mix of corporate and Treasury bond ETFs; bitcoin, gold and precious metal ETFs, a small-cap ETF based on the Russell 2000 and other investment instruments.
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