Finance

Mortgage rates hover near 7% with no sign of budging: Freddie Mac

Published

10 months ago

April 4, 2024

Business Finance News

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Mortgage rates have stalled near 7% with the Fed’s plan to dial back interest rates delayed. (iStock)

Mortgage rates hovered in the 6.8% range again this week and are likely to remain in that range despite improving inflation metrics, according to Freddie Mac.

The average 30-year fixed-rate mortgage was 6.82% for the week ending April 4, according to Freddie Mac’s latest Primary Mortgage Market Survey. That’s an increase from the previous week when it averaged 6.79%. A year ago, the 30-year fixed-rate mortgage averaged 6.28%.

The average rate for a 15-year mortgage was 6.06%, down from 6.11% last week and up from 5.64% last year.

The Federal Reserve has signaled that it is in no rush to lower interest rates and is committed to maintaining its restrictive monetary policy until it gets further indication that inflation is moving towards its 2% target rate. Fed Chair Jerome Powell said recently that the plan to lower interest rates is still on track but that the central bank will monitor inflation and other economic indicators to determine when that happens. Market expectations are that the first rate cut will come in the summer, if not later in the year.

“Mortgage rates showed little movement again this week, hovering around 6.8 percent,” Freddie Mac’s Chief Economist Sam Khater said. “Since the start of 2024, the 30-year fixed-rate mortgage has not reached seven percent but has not dropped below 6.6 percent either.

“While incoming economic signals indicate lower rates of inflation, we do not expect rates will decrease meaningfully in the near-term,” Khater continued. “On the plus side, inventory is improving somewhat, which should help temper home price growth.”

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

BIDEN WANTS TO GIVE HOMEBUYERS $400 PER MONTH: STATE OF THE UNION

Mortgage apps plunge as interest rates steady

Elevated mortgage rates continued to weigh down on home buying. The Mortgage Bankers Association (MBA) said Wednesday that purchase applications have fallen for three consecutive weeks and dropped 0.6% from one week earlier. Refinancings dropped 2% and were 5% lower year-over-year.

“Mortgage rates have hovered around 7 percent recently, leading to a three-week slide in mortgage applications,” MBA President and CEO Bob Broeksmit said. “Although the home purchase market remains subdued, the uptick in FHA purchase applications is an indication that first-time buyers are active this spring despite continuing supply and affordability headwinds.”

Additionally, elevated mortgage rates and high home prices have now made renting a better month-to-month deal than buying a starter home in all 50 markets, according to the Realtor.com February 2024 Rental Report.

If you’re looking to become a homeowner, you could still find the best mortgage rates by shopping around. Visit Credible to compare your options without affecting your credit score.

HOMEBUYERS GAINED THOUSANDS OF DOLLARS AS MORTGAGE INTEREST RATES FALL: REDFIN

For sale housing inventory improving

Spring homebuying activity will likely be affected by the still-too-high borrowing costs, however, housing inventory is improving. According to Relator.com, an increasing number of homeowners are choosing to put their homes up for sale despite having to relinquish their lower mortgage rates to move in today’s housing market.

Homes listed for sale increased 23.5% in March compared with the same time in 2023, according to Realtor.com’s March 2024 Housing Trends Report. Moreover, in the first three months of 2024, the inventory of homes actively for sale was at its highest level since 2020. Much of the activity has been driven by homes priced in the $200,000 to $350,000 range.

“A higher mortgage rate has been a deal breaker for many over the last year, but an increasing number of homeowners are choosing to sell as we approach what is the ideal time–the week of April 14-20,” Realtor.com Chief Economist Danielle Hale said. “The number of homes actively for sale is at its highest level for this time of year since 2020.”

If you’re considering becoming a homeowner, it could help to shop around to find the best mortgage rate. Visit Credible to compare options from different lenders and choose the one with the best rate for you.

HIGH HOMEOWNERS INSURANCE RATES SCARING AWAY FLORIDA HOMEBUYERS, OTHER STATES FACE THE SAME ISSUE

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

Chinese investment in the U.S. isn’t likely to pick up under Trump

Published

8 hours ago

January 20, 2025

Business Finance News

Cho Tak Wong, the chairman of auto glass giant Fuyao Glass, bought the vacant General Motors manufacturing plant in Moraine, Ohio in 2014.

The Washington Post | The Washington Post | Getty Images

Chinese investments in the U.S. have dramatically declined since Donald Trump’s first term. This trend is unlikely to reverse as Trump returns to the White House, analysts said.

Trump has threatened additional tariffs on Chinese goods soon after his inauguration on Monday, building on an increasingly tough U.S. stance on Beijing.

“That’s probably the last thing on Trump’s mind, is trying to incentivize [Chinese companies] to invest here,” said Rafiq Dossani, an economist at U.S.-based think tank RAND.

“There’s an ideological mismatch. All the rhetoric is, keep China out of the U.S., let their products come in, which are low-end,” he said in an interview earlier this month. But other than that, “don’t, don’t let them come in.”

In the last several weeks, Emirati property giant Damac has pledged $20 billion to build data centers in the U.S., while SoftBank CEO Masayoshi Son announced a $100 billion investment for artificial intelligence development in the U.S. over Trump’s four-year term.

Trump's stance on China remains unclear, says US ambassador

Chinese investment deals in the U.S. have slowed drastically, according to the latest American Enterprise Institute data. Just $860 million flowed into the U.S. in the first six months of 2024, following $1.66 billion in 2023. That’s down sharply from $46.86 billion in 2017, when Trump began his first term.

At the peak, Chinese companies had made high-profile U.S. acquisitions, such as buying the Waldorf Astoria hotel in New York. But regulators on both sides have stemmed the flow.

“Chinese investment in the U.S. has slowed down dramatically since Beijing tightened control over capital outflows in 2017, followed by a series of regulatory policies in the U.S. aimed at excluding investments in certain sectors,” Danielle Goh, senior research analyst at Rhodium Group, said in an email.

In the “foreseeable future,” she doesn’t expect Chinese investments in the U.S. will recover the peak levels seen during the 2016 to 2017 period. Goh pointed out that instead of acquisitions, Chinese companies have turned more to small joint ventures with U.S. companies or greenfield investments, in which business are built from scratch.

For example, Chinese battery manufacturing company EVE Energy is the technology partner with a 10% stake in a joint venture with U.S. engine company Cummins’ Accelera division, Daimler Truck and PACCAR. The companies announced in June 2024 they were kicking off plans for a battery factory in Mississippi that would begin production in 2027 and create more than 2,000 jobs.

Since the Covid-19 pandemic, the U.S.-China Chamber of Commerce has mostly helped Chinese e-commerce companies set up local offices, rather than establish manufacturing businesses, the nonprofit’s president Siva Yam told CNBC.

“Most of those investment nowadays tend to be a little bit smaller, so they are not on the radar, easier to approve,” he said, referring to regulators in both the U.S. and China. But he remained uncertain about whether Chinese companies could use investments to offset the impact of tariffs.

Individual U.S. states have grown increasingly wary of Chinese investment. Last spring, Politico reported that more than 20 states were passing new restrictions on land purchases by Chinese citizens and companies, or updating existing rules.

Chinese hackers in December targeted a government office that reviews foreign investment in the United States, CNN reported, citing U.S. officials. This was part of a wider breach of the Treasury Department, which declined a CNBC request for comment.

Deal-making strategy?

Trump has indicated tariffs may be used to coerce Chinese investment in the U.S.

In his speech accepting the Republican nomination, he said, “I will bring auto jobs back to our country, through the proper use of taxes, tariffs, and incentives, and will not allow massive auto manufacturing plants to be built in Mexico, China, or other countries.”

“The way they will sell their product in America is to BUILD it in America, and ONLY in America. This will create massive jobs and wealth for our country,” he said, according to an NBC News transcript.

Chinese battery giant CATL reportedly said in November it would build a U.S. plant if Trump allowed it. The company did not immediately respond to a request for comment.

Advocacy group Center for American Progress pointed out in December that during his first term, Trump cancelled restrictions on Chinese telecommunications company ZTE — just days after the Chinese government and Chinese banks invested $1 billion in a Trump Organization-affiliated theme park in Indonesia.

The Trump transition team did not immediately respond to a request for comment on the ZTE deal or the opportunities for Chinese companies to invest in the U.S.

Even if Trump welcomed more Chinese investment, or coerced it through tariffs, large investments are long-term processes that won’t happen overnight, pointed out Derek Scissors, senior fellow at the American Enterprise Institute.