This week, average 30-year mortgage rates decreased to around 6.85%, but fluctuations may occur depending on incoming inflation data. If inflation slows, mortgage rates could drop as the Federal Reserve may lower the federal funds rate. Investors predict the first cut to happen in September, potentially leading to lower mortgage rates later in the year.
Thirty-year mortgage interest rates are currently around 6.8%, slightly below the average in April, with expectations for a decrease in 2024 due to slowing inflation and potential federal rate cuts. Federal Reserve Chair Jerome Powell mentioned the possibility of rate reductions in response to unexpected labor market weakness. The average 30-year fixed mortgage rate this week was 7.22%, up by five basis points from the previous week, impacting long-term home loan repayment terms.
The Bank of England's Monetary Policy Committee voted 7-2 to keep UK interest rates at 5.25%, but one member voted for a cut, indicating a potential decrease in borrowing costs soon. New forecasts show stronger GDP, lower unemployment, and inflation reaching the 2% target. Governor Andrew Bailey is optimistic about inflation falling and suggests waiting for more evidence before cutting rates. Economists believe the Bank may cut rates this summer, contrasting the Federal Reserve's stance. Predictions suggest a rate cut may come in August or even sooner.
A recent New York Federal Reserve survey showed that only 13.4% of renters believe they will one day afford a home, down from 20.8% in 2014. Factors like high mortgage rates at 7.22%, increasing housing prices to $388,700, and expected rental cost spikes of 9.7% are dampening possibilities of owning a home. Survey respondents predict a 5.1% rise in housing prices over the next year and anticipate mortgage rates to reach record highs of 8.7% in a year and 9.7% in three years. These challenges persist amid uncertainties about potential interest rate cuts by the Federal Reserve.
(Reuters) - Stalled inflation buoyed in part by housing market strength means the Federal Reserve will need to hold borrowing costs steady for an "extended period," and possibly all year, Minneapolis Federal Reserve President Neel Kashkari said on Tuesday. "I would need to see multiple positive inflation readings suggesting that the disinflation process is on track" to support a rate cut, Kashkari said at a Milken Institute conference. He noted that he will also be tracking developments in the labor market, where a "marked" turn to weakness could also justify a rate cut. The bar for a rate hike is "quite high but it's not infinite," Kashkari said. "There is a limit when we say, 'OK, we need to do more.
The pandemic-related decline in interest rates in 2020 and 2021 has reversed, with rates on high-yield savings accounts and CDs increasing significantly in response to rising inflation. Despite hopes for rate cuts in 2024, the Federal Reserve has maintained rates at a 23-year high due to inflation reports, benefiting savers. CDs offer higher rates and locked-in protection for savers, ensuring predictability as rates potentially decrease later in 2024 or in 2025. Factors affecting CD earnings include interest rates, CD term, and deposit amount, with no assumed fees or penalties.
BERLIN, May 8 (Reuters) - There is no reason for the European Central Bank to cut interest rates too fast or too strongly, Austrian central bank Governor Robert Holzmann told Handelsblatt in an interview published on Wednesday, adding much depended on the U.S. Federal Reserve. "If the time comes in June, further steps will certainly follow," said Holzmann. "But I see absolutely no reason for us to cut key interest rates too quickly, too strongly," he said.
Katherine Watt
Business Insider
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