Finance

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

Published

10 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.

MIDDLE-INCOME AMERICANS FEEL MORE OPTIMISM ABOUT FINANCES AND ECONOMY’S DIRECTION: SURVEY

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

China’s April retail sales growth of 5.1% misses expectations as consumption remains a worry

Published

4 hours ago

May 18, 2025

Business Finance News

Citizens are shopping at a supermarket in Nanjing, East China’s Jiangsu province, on March 9, 2024.

Costfoto | Nurphoto | Getty Images

China’s retail sales growth slowed in April, data from the National Bureau of Statistics showed Monday, signaling that consumption remains a worry for the world’s second-largest economy.

Retail sales rose 5.1% from a year earlier in April, missing analysts’ estimates of 5.5% growth, according to a Reuters poll. Sales had grown by 5.9% in the previous month.

Industrial output grew 6.1% year on year in April, stronger than analysts’ expectations for a 5.5% rise, while slowing down from the 7.7% jump in March.

Fixed-asset investment for the first four months this year, which includes property and infrastructure investment, expanded 4.0%, slightly lower than analysts’ expectations for a 4.2% growth in a Reuters poll.

The drag from real estate worsened within fixed asset investment, falling 10.3% for the year as of April.

The urban survey-based unemployment rate in April eased to 5.1% from 5.2% in March.

The data came against the backdrop of trade tensions between China and the U.S.

U.S. President Donald Trump placed tariffs of 145% on imports from China that came into effect in April. Beijing retaliated with tariffs in kind, with 125% levies on American imports.

Trade-war fears have receded after a meeting of U.S. and Chinese trade representatives in Switzerland earlier this month led to a lower set of levies between the world’s two largest economies.

Beijing and Washington agreed to roll back most of the tariffs imposed on each other’s goods for 90 days, allowing some room for further negotiation to reach a more lasting deal.

That prompted a slew of global investment banks to raise their forecasts for China’s economic growth this year while paring back expectations for more proactive stimulus as Beijing strives to reach its growth target of around 5%.

This is breaking news. Please check back later for updates.

Finance

Scott Bessent calls Moody’s a ‘lagging indicator’ after U.S. credit downgrade

Published

16 hours ago

May 18, 2025

Business Finance News

Treasury Secretary Scott Bessent said in an interview on NBC News’ “Meet the Press” that Moody’s Ratings were a “lagging indicator” after the group downgraded the U.S.’ credit rating by a notch from the highest level.

“I think that Moody’s is a lagging indicator,” Bessent said Sunday. “I think that’s what everyone thinks of credit agencies.”

Moody’s said last week that the downgrade from Aaa to Aa1 “reflects the increase over more than a decade in government debt and interest payment ratios to levels that are significantly higher than similarly rated sovereigns.”

The treasury secretary asserted that the downgrade was related to the Biden administration’s spending policies, which that administration had touted as investments in priorities, including combatting climate change and increasing health care coverage.

“Just like Sean Duffy said with our air traffic control system, we didn’t get here in the past 100 days,” Bessent continued, referring to the transportation secretary. “It’s the Biden administration and the spending that we have seen over the past four years.”

The U.S. has $36.22 trillion in national debt, according to the Treasury Department. It began growing steadily in the 1980s and continued increasing during both President Donald Trump’s first term and former President Joe Biden’s administration.

Bessent also told moderator Kristen Welker that he spoke on the phone with the CEO of Walmart, Doug McMillon, who the treasury secretary said told him the retail giant would “eat some of the tariffs, just as they did in ’18, ’19 and ’20.”

Walmart CFO John David Rainey previously told CNBC that Walmart would absorb some higher costs related to tariffs. The CFO had also told CNBC separately that he was “concerned” consumers would “start seeing higher prices,” pointing to tariffs.

Trump said in a post to Truth Social last week that Walmart should “eat the tariffs.” Walmart responded, saying the company has “always worked to keep our prices as low as possible and we won’t stop.”

“We’ll keep prices as low as we can for as long as we can given the reality of small retail margins,” the statement continued.

When asked about his conversation, Bessent denied he applied any pressure on Walmart to “eat the tariffs,” noting that he and the CEO “have a very good relationship.”

“I just wanted to hear it from him, rather than second-, third-hand from the press,” Bessent said.

McMillon had said on Walmart’s earnings call that tariffs have put pressure on prices. Bessent argued that companies “have to give the worst case scenario” on the calls.

The White House has said that countries are approaching the administration to negotiate over tariffs. The administration has also announced trade agreements with the United Kingdom and China.

Bessent said on Sunday that he thinks countries that do not negotiate in good faith would see duties return to the rates announced the day the administration unveiled across-the-board tariffs.

“The negotiating leverage that President Trump is talking about here is if you don’t want to negotiate, then it will spring back to the April 2 level,” Bessent said.

Bessent was also asked about Trump saying the administration would accept a luxury jet from Qatar to be used as Air Force One, infuriating Democrats and drawing criticism from some Republicans as well.

The treasury secretary called questions about the $400 million gift an “off ramp for many in the media not to acknowledge what an incredible trip this was,” referring to investment commitments the president received during his trip last week to Saudi Arabia, Qatar and the United Arab Emirates.

“If we go back to your initial question on the Moody’s downgrade, who cares? Qatar doesn’t. Saudi doesn’t. UAE doesn’t,” he said. “They’re all pushing money in.”

When asked for his response to those who argue that the jet sends a message that countries can curry favor with the U.S. by sending gifts, Bessent said that “the gifts are to the American people,” pointing to investment agreements that were unveiled during Trump’s Middle East trip.

Sen. Chris Murphy, D-Conn., criticized Bessent’s comments about the credit downgrade, saying in a separate interview on “Meet the Press.”

“I heard the treasury secretary say that, ‘Who cares about the downgrading of our credit rating from Moody’s?’ That is a big deal,” Murphy said.

“That means that we are likely headed for a recession. That probably means higher interest rates for anybody out there who is trying to start a business or to buy a home,” he continued. “These guys are running the economy recklessly because all they care about is the health of the Mar-a-Lago billionaire class.”