Personal Finance

Here’s what to expect on mortgage rates into early 2025

Published

6 months ago

November 15, 2024

Business Finance News

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Mortgage rates seem to have steadied. That may be a good sign for the market, experts say.

The average 30-year fixed rate mortgage in the U.S. slightly dipped to 6.78% for the week ending Nov. 14, barely changed from 6.79% a week prior, according to Freddie Mac data via the Federal Reserve.

“Even though it’s higher than it has been over the course of several weeks, it’s probably good news for homebuyers,” said Jessica Lautz, deputy chief economist and vice president of research at the National Association of Realtors.

“When rates are moving around a lot, it makes a lot of uncertainty in the market,” Lautz said.

Mortgage rates declined this fall in anticipation of the first interest rate cut since March 2020. But then borrowing costs jumped again this month as the bond market reacted to Donald Trump’s election win.

While the president-elect has talked about bringing mortgage rates down, presidents do not control borrowing costs for home loans, experts say.

Instead, mortgage rates closely track Treasury yields and are partially affected by what happens with the federal funds rate.

“They foresee inflationary policies, whether it’s tariffs or greater government spending, the tax bill … they’re pricing in more inflation,” said James Tobin, president and CEO of the National Association of Home Builders. “As the bond market reacts, mortgage rates are going to react to that, too.”

Less volatility can be a good sign, said Chen Zhao, Chief economist at Redfin, an online real estate brokerage.

“High volatility by itself actually pushes mortgage rates even higher above treasury yields,” Zhao said. “More stable rates also means that homebuyers don’t have to worry during their home search about what their budget allows for changing.”

Trump’s team did not respond to a request for comment.

Don’t expect ‘huge swings’ on mortgage rates

Election uncertainty contributed to an upward swing in mortgage rates during October. Then rates went up even more last week as the stock market and yields reacted to the election results.

The 10-year Treasury yield jumped 15 basis points on Nov. 6, closing to trade at 4.43%, hitting its highest level since July, as investors bet a Trump presidency would increase economic growth, along with fiscal spending. The yield on the 2-year Treasury was up by 0.073 basis point to 4.276% that day, reaching its highest level since July 31.

But now that we have a president-elect, mortgage rates are expected to gradually come down over time, Lautz said.

From a monetary policy standpoint, future rate cuts are up in the air. Federal Reserve Chairman Jerome Powell said on Thursday that strong U.S. economic growth will allow policymakers to take their time in deciding how far and how fast to lower interest rates.

If the Fed continues to ease the federal funds rate, it could provide indirect downward pressure on mortgage rates, according to NAHB chief economist Robert Dietz.

“However, improved growth expectations would lead to higher rates, as would larger government deficits,” he said.

Experts say that mortgage rates might head into a “bumpy” or “volatile” path over the next year.

“I don’t think that there’s going to be any huge swings down into the 5% range,” Lautz said. “Our expectation is that rates are going to be in the 6% range as we move into 2025,” she said.

How buyers, sellers and homeowners can benefit

Rates that are trending lower can present an opportunity for buyers who have been house hunting for a while, especially as the winter season kicks in. Competition tends to slow down in the winter months in part because homebuyers with kids are in the middle of the school year and reluctant to move, Lautz explained.

Our expectation is that rates are going to be in the 6% range as we move into 2025.

Jessica Lautz

Jessica Lautz, deputy chief economist and vice president of research at the National Association of Realtors

Current homeowners can also make the most of lower rates.

For example, if you bought your home around this time last year, when mortgage rates peaked at around 8%, you might benefit from a mortgage refinance, Lautz said.

It “makes sense” to consider a refinance if rates have fallen one to two points since you took out the loan, Jeff Ostrowski, a housing expert at Bankrate.com, told CNBC after the Fed’s first rate cut this fall.

Remember that a loan refinance isn’t free; you may incur associated costs like closing costs, an appraisal and title insurance. While the total cost will depend on your area, a refi is going to cost between 2% and 6% of the loan amount, Jacob Channel, an economist at LendingTree, said at that time.

If you’re pondering on whether to refi or not, look at what’s going on with rates, reach out to lenders and see if refinancing makes sense for you, experts say.

Homeowners have earned record home equity. U.S. homeowners with mortgages have a net homeowner equity of over $17.6 trillion in the second quarter of 2024, according to CoreLogic. Home equity increased in the second quarter of this year by $1.3 trillion, an 8.0% growth from a year prior.

If you’re looking to sell your current home, you may be able to counteract slightly high borrowing costs on your next property by placing a larger down payment, Lautz said.

Personal Finance

Trump’s IRS Commissioner pick Billy Long grilled by Senate Democrats

Published

4 hours ago

May 20, 2025

Business Finance News

UNITED STATES – MARCH 31: Rep. Billy Long, R-Mo., is seen during the House Energy and Commerce Subcommittee on Communications and Technology hearing titled Connecting America: Oversight of the FCC, in Rayburn Building on Thursday, March 31, 2022.

Tom Williams | Cq-roll Call, Inc. | Getty Images

Senate lawmakers pressed President Donald Trump‘s pick for IRS Commissioner, former Missouri Congressman Billy Long, about his opinions on presidential power over the agency, use of taxpayer data and his ties to dubious tax credits.

Long, who worked as an auctioneer before serving six terms in the House of Representatives, answered Senate Finance Committee queries during a confirmation hearing Tuesday.

One of the key themes from Democrats was Trump’s power over the agency, and Long told the committee, “the IRS will not, should not be politicized on my watch.”

Sen. Elizabeth Warren, D-Mass., who provided her questions to Long in advance, asked whether Trump could legally end Harvard University’s tax-exempt status. If permitted, the move could have broad implications for the President’s power over the agency, she argued.

However, Long didn’t answer the question directly.

“I don’t intend to let anybody direct me to start [an] audit for political reasons,” he said.

Ties to dubious tax credits

Sen. Ron Wyden, D-Ore., scrutinized Long’s online promotion of the pandemic-era employee retention tax credit worth thousands per eligible employee. The tax break sparked a cottage industry of scrupulous companies pushing the tax break to small businesses that didn’t qualify.

“I didn’t say everyone qualifies,” Long said. “I said virtually everyone qualifies.”

Senators also asked about Long’s referral income from companies pushing so-called “tribal tax credits,” which the IRS has told Democratic lawmakers don’t exist.

“I did not have any perception whatsoever that these did not exist,” Long told the committee.

Senate Democrats also raised questions about donations people connected to those credits made to Long’s dormant Senate campaign, after Trump announced his nomination to head the IRS.

Direct File ‘one of the hottest topics’

While Senate Democrats grilled Long on his record, Republicans focused on questions about taxpayer service. Several Republican lawmakers voiced support for Long, including the committee chairman Mike Crapo, R-Idaho.

If confirmed by the Senate, Long could mean a shift for the agency, which previously embarked on a multibillion-dollar revamp, including upgrades to customer service, technology and a free filing program, known as Direct File.

When asked about the future of Direct File, Long said he planned to promptly examine the program, describing it as “one of the hottest topics at the IRS.”

‘An unconventional pick’

Since former IRS Commissioner Danny Werfel’s resignation in January, there have been three other leaders for the agency. If confirmed, Long would serve as IRS Commissioner for the remainder of the term through Nov. 12, 2027. The date for the vote isn’t yet confirmed.

Mark Everson, who served as IRS commissioner from 2003 to 2007, described Long as “an unconventional pick,” compared with the experience profiles of previous IRS leaders.

But Long’s years in Congress will provide “credibility up on the Hill with the people who matter, which will be important,” Everson, who is currently vice chairman at Alliant, a management consulting company, previously told CNBC.

Long may be in a “better position than others to argue for the appropriate independence of the agency,” he said.

Personal Finance

Student loan borrowers struggle to get into income-driven repayment plan

Published

6 hours ago

May 20, 2025

Business Finance News

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Nearly 2 million federal student loan borrowers who’ve requested to be in an affordable repayment plan are stuck in a backlog of applications, waiting to be approved or denied, according to new data recently shared by the U.S. Department of Education.

The Education Department disclosed the information in a May 15 court filing in response to a legal challenge lodged by the American Federation of Teachers. The teachers’ union sued the Trump administration in March for shutting down access to income-driven repayment plan applications on the Education Department’s website.

IDR plans cap borrowers’ monthly bills at a share of their discretionary income with the aim of making their payments manageable.

In late March, the Trump administration made the online applications available again, and said that it pulled the forms because it needed to make sure all repayment plans complied with a court order that blocked the Biden administration’s new IDR plan, known as SAVE, or the Saving on a Valuable Education plan.

Trump officials argued that the ruling had broader implications for other IDR plans, and it ended up removing the loan forgiveness component under some of the options.

The backlog complicates things for borrowers as the Trump administration restarts collection activity. The Education Department estimates that nearly 10 million people could be in default on their student loans within months.

Without access to an affordable repayment plan, student loan borrowers can be suspended on their timeline to loan forgiveness and at risk of falling behind and facing collection activity.

‘The opposite of government efficiency’

In the May court document, the Education Department disclosed that more than 1.98 million IDR applications remained pending as of the end of April. Only roughly 79,000 requests had been approved or denied during that month.

Consumer advocates slammed the findings.

“This filing confirms what borrowers have known for months: Their applications for loan relief have effectively been going into a void,” said Winston Berkman-Breen, legal director at the Student Borrower Protection Center.

The Center said that if the Education Department continued to move at its current rate, it would take more than two years to process the existing applications.

AFT President Randi Weingarten called the backlog “outrageous and unacceptable.”

“This is the opposite of government efficiency,” Weingarten said. “Millions of borrowers are being denied their legal right to an affordable repayment option.”

What’s behind the backlog

A spokesperson for the Education Dept. blamed the backlog on the Biden administration, saying that it “failed to process income-driven repayment applications for borrowers, artificially masking rising delinquency and default rates and promising illegal student loan forgiveness to win points with voters.”

“The Trump Administration is actively working with federal student loan servicers and hopes to clear the Biden backlog over the next few months,” they said.

The Biden administration put the student loan borrowers who’d enrolled in its new IDR plan, SAVE, into an interest-free forbearance while the GOP-led legal challenges to the program unfolded. Many of the currently pending IDR requests are likely from borrowers who are trying to leave that blocked plan to get into an available one.

Sarah Sattlemeyer, a project director at New America and senior advisor under the Biden administration, said that the current backlog began last year “and has existed across both the Biden and Trump administrations” as a result of the legal battle over the SAVE plan.

“It is a demonstration of how complicated the loan system is, how much uncertainty there has been over the last few years and what is at stake,” Sattlemeyer said. “There also isn’t clarity around how some applications in the backlog should or will be handled, such as those where a borrower chose an option that no longer exists on the application.”

Student loan default collection restarting

In recent months, the Trump administration has terminated around half of the Education Department’s staff, including many of the people who helped assist borrowers.

That is also likely one reason why so many of the applications haven’t been processed, said higher education expert Mark Kantrowitz.

“Perhaps the reduction in staff is affecting their ability to process the forms,” Kantrowitz said.

Personal Finance

Student loan delinquencies risk ‘spillovers’ to other debts, NY Fed

Published

9 hours ago

May 20, 2025

Business Finance News

The Trump administration’s resumption of collection efforts on defaulted federal student loans has far-reaching consequences for delinquent borrowers.

For starters, borrowers who are in default may have wages, tax returns and Social Security payments garnished.

But involuntary collections could also have a “spillover effect,” which puts consumers at risk of falling behind on other debt repayments, according to a recent report from the Federal Reserve Bank of New York,

As collection activity restarts, disposable income falls

“We were obviously somewhat concerned about potential spillovers to delinquencies on other types of debt,” the New York Fed researchers said on a press call earlier this month.

“During the period where people were not required to make payments on their student loans, they could have used that money to pay their credit card bills and auto loans,” the researchers said. “Now they have to make these payments again on their student loans, so that could put pressure on their ability to pay these other loans.”

The U.S. Department of Education’s crack down on student loan repayments could take billions of dollars out of consumers’ pockets, reports show. Monthly collections on defaulted loans may reduce disposable personal income between $3.1 billion to $8.5 billion a month, according to research by JPMorgan.

“Part of the reason that some people are adding to credit card debt is because they have student loan payments — that’s the spillover effect,” said Ted Rossman, senior industry analyst at Bankrate. “Something’s got to give.”

‘It’s just money that can’t go to other financial things’

Until earlier this month, the Department of Education had not collected on defaulted student loans since March 2020. After the Covid pandemic-era pause on federal student loan payments expired in September 2023, the Biden administration offered borrowers another year in which they would be shielded from the impacts of missed payments. That on-ramp officially ended on Sept. 30, 2024, and the Education Department restarted collection efforts on defaulted student loans on May 5.

Whether borrowers face garnishment, or opt to resume payments to get current on their loan, that’s likely to have a significant impact on their wallet.

“It’s just money that can’t go to other financial things,” said Matt Schulz, chief credit analyst at LendingTree.

After the five-year pause ended and collections are resumed, the delinquency rate for student loan balances spiked, the New York Fed found. Nearly 8% of total student debt was reported as 90 days past due in the first quarter of 2025, compared to less than 1% in the previous quarter.

Currently, around 42 million Americans hold federal student loans and roughly 5.3 million borrowers are in default, according to the Education Department. Another 4 million borrowers are in “late-stage delinquency,” or over 90 days past due on payments.

Among borrowers who are now required to make payments — not including those who are in deferment or forbearance or are currently enrolled in school — nearly one in four student loan borrowers are behind in their payments, the New York Fed found.

As borrowers transition out of forbearance and into repayment, those borrowers may also face challenges making payments, according to a separate research note by Bank of America. “This transition will likely drive delinquencies and defaults on student loans higher and could have further knock-on effects for consumer finance companies,” Bank of America analyst Mihir Bhatia wrote to clients on May 15.

In a blog post, the New York Fed researchers noted that “it is unclear whether these penalties will spill over into payment difficulties in other credit products, but we will continue to monitor this space in the coming months.”

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