Finance

Mortgage rates are nearing 7% as inflation ticks back up: Freddie Mac

Published

1 year ago

April 12, 2024

Business Finance News

The 30-year fixed-rate mortgage averaged 6.88% this past week, according to Freddie Mac. (iStock )

Mortgage rates continue their steady climb upward. Rates for 30-year mortgages averaged 6.88% this past week, Freddie Mac reported. Rates last week averaged 6.82%, and a year ago, the 30-year fixed-rate mortgage averaged 6.27%.

“Mortgage rates have been drifting higher for most of the year due to sustained inflation and the reevaluation of the Federal Reserve’s monetary policy path,” Sam Khater, Freddie Mac’s chief economist said.

Borrowers looking for 15-year mortgages also saw average rates go up this week. The average 15-year rate was 6.16%, up from last week when it averaged 6.06%. Inflation is pushing these rates higher, but the beginning of the spring buying season is also bringing more demand, adding to the rising rates.

“It’s clear that while the trend in inflation data has been close to flat for nearly a year, the narrative is much less clear and resembles the unrealized expectations of a recession from a year ago,” Khater said.

Visit an online marketplace like Credible to compare rates, choose your loan term, and get preapproved with multiple lenders.

SPRING HOMEBUYING SEASON BRINGS SLIGHTLY MORE OPTIMISM AS LISTINGS CONTINUE TO RISE

Monthly mortgage payments just hit an all-time high

Mortgage interest rates are adding to the overall cost of getting a mortgage. According to data from Redfin, over the period of four weeks ending April 7, the average mortgage payment was $2,747, an all-time high.

“For homebuyers, the latest CPI report means mortgage rates will stay higher for longer because it makes the Fed unlikely to cut interest rates in the next few months,” Redfin Economic Research Lead Chen Zhao said.

High sale prices on homes contribute to overall high costs as well. The median sale price in April is $378,250, which is up 4.5% year over year. This is just $5,000 less than the record high in June 2022. With demand also rising, prices are likely to stay high for the near future. A potential increase in houses for sale could bring some relief, though.

“Housing costs are likely to continue going up for the near future, but persistently high mortgage rates and rising supply could cool home-price growth by the end of the year, taking some pressure off costs,” Zhao said.

As more homes come on the market, you have more homebuying options. Make sure you’re ready with the right mortgage lender and rate. Head to Credible today to compare rates and lenders in minutes.

HOME LISTINGS ARE RISING, BUT BUYERS AREN’T BUYING DUE TO HIGH INTEREST RATES

Homeowners insurance expected to rise 6% this year

Adding on to the list of high housing costs — homeowners insurance costs aren’t expected to drop anytime soon.

Homeowners insurance rates are projected to go up by 6% in 2024, according to an Insurify study. This means rates could end the year at $2,522, on average. Rates have steadily been rising over the years. Annual rates increased by 19.8% between 2021 and 2023, going from $1,984 to $2,377, on average. Increases largely affected states that dealt with more frequent natural disasters.

Floridians pay the most for their home insurance policies, averaging an annual rate of $10,996 in 2023. Florida’s homeowners are likely to see a 7% increase in 2024 and will pay an average of $11,759 annually. The state with the second-highest home insurance rates is Louisiana.

The average homeowner in Louisiana pays $6,354 annually. Currently, residents don’t have the highest rates in the country, but after the projected 23% hike expected in 2024, this may change.

Credible can walk you through each homeowner’s insurance policy and coverage. Plus, they can tell you how to save hundreds on homeowners insurance each year.

HOME INSURANCE COSTS ARE HIGHEST IN THESE STATES – HERE’S HOW TO LOWER YOUR PREMIUMS

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.

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Swiss government proposes tough new capital rules in major blow to UBS

Published

3 days ago

June 6, 2025

Business Finance News

A sign in German that reads “part of the UBS group” in Basel on May 5, 2025.

Fabrice Coffrini | AFP | Getty Images

The Swiss government on Friday proposed strict new capital rules that would require banking giant UBS to hold an additional $26 billion in core capital, following its 2023 takeover of stricken rival Credit Suisse.

The measures would also mean that UBS will need to fully capitalize its foreign units and carry out fewer share buybacks.

“The rise in the going-concern requirement needs to be met with up to USD 26 billion of CET1 capital, to allow the AT1 bond holdings to be reduced by around USD 8 billion,” the government said in a Friday statement, referring to UBS’ holding of Additional Tier 1 (AT1) bonds.

The Swiss National Bank said it supported the measures from the government as they will “significantly strengthen” UBS’ resilience.

“As well as reducing the likelihood of a large systemically important bank such as UBS getting into financial distress, this measure also increases a bank’s room for manoeuvre to stabilise itself in a crisis through its own efforts. This makes it less likely that UBS has to be bailed out by the government in the event of a crisis,” SNB said in a Friday statement.

‘Too big to fail’

UBS has been battling the specter of tighter capital rules since acquiring the country’s second-largest bank at a cut-price following years of strategic errors, mismanagement and scandals at Credit Suisse.

The shock demise of the banking giant also brought Swiss financial regulator FINMA under fire for its perceived scarce supervision of the bank and the ultimate timing of its intervention.

Swiss regulators argue that UBS must have stronger capital requirements to safeguard the national economy and financial system, given the bank’s balance topped $1.7 trillion in 2023, roughly double the projected Swiss economic output of last year. UBS insists it is not “too big to fail” and that the additional capital requirements — set to drain its cash liquidity — will impact the bank’s competitiveness.

At the heart of the standoff are pressing concerns over UBS’ ability to buffer any prospective losses at its foreign units, where it has, until now, had the duty to back 60% of capital with capital at the parent bank.

Higher capital requirements can whittle down a bank’s balance sheet and credit supply by bolstering a lender’s funding costs and choking off their willingness to lend — as well as waning their appetite for risk. For shareholders, of note will be the potential impact on discretionary funds available for distribution, including dividends, share buybacks and bonus payments.

“While winding down Credit Suisse’s legacy businesses should free up capital and reduce costs for UBS, much of these gains could be absorbed by stricter regulatory demands,” Johann Scholtz, senior equity analyst at Morningstar, said in a note preceding the FINMA announcement.

“Such measures may place UBS’s capital requirements well above those faced by rivals in the United States, putting pressure on returns and reducing prospects for narrowing its long-term valuation gap. Even its long-standing premium rating relative to the European banking sector has recently evaporated.”