If you like your mortgage rate movement boring and minimal, this week’s for you (and last week, and the week before that). Going all the way back to January 17th, the average lender hasn’t changed their top tier 30yr fixed rate quote by more than 0.05%, and has been operating in an overall range of 0.07%.
To get an idea of how narrow that is, a typical highly volatile day involves rates moving by more than .12%. In stark contrast, the average rate hasn’t changed by even 0.01% since last Thursday.
This stability isn’t for lack of apparent inspiration for volatility. Clearly, there are plenty of political developments in the first month of any new presidential administration. Those developments have indeed translated to small scale, in-range volatility in the markets that determine interest rates, but they’ve largely canceled each other out, or been canceled out by other events.
Despite the calm, we wouldn’t advocate a complacent attitude looking forward. Rates can still be impacted by economic data and the next 6 business days bring the heaviest hitting reports of the month (chiefly Friday’s jobs report and next Wednesday’s Consumer Price Index).
In the ongoing battle between mortgage rates and excitement, it seems that mortgage rates have once again come out on top. Despite the recent surge in excitement over the booming housing market and low inventory levels, mortgage rates have managed to remain relatively stable.
This victory for mortgage rates means that homebuyers and homeowners can continue to take advantage of historically low rates, making it an ideal time to refinance or purchase a new home. With rates remaining low, buyers can lock in affordable monthly payments and potentially save thousands of dollars over the life of their loan.
While excitement may be high in the housing market, it’s important for buyers to remain focused on securing the best possible mortgage rate for their individual circumstances. By working with a trusted lender and staying informed about market trends, buyers can ensure they make the most of this current victory for mortgage rates.
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mortgage rates, victory, excitement, mortgage news, finance, interest rates, home buying, real estate, economic trends, mortgage market, financial news
U.S. President Donald Trump looks on as he signs an executive order in the Oval Office at the White House in Washington, U.S., Jan. 31, 2025.
Carlos Barria | Reuters
President Donald Trump agreed with the Federal Reserve for its decision last week to leave interest rates unchanged, an early pivot from his previous demand that the central bank ease “immediately.”
In an exchange with reporters Sunday, Trump said holding its key borrowing level in a range between 4.25%-4.5% was the correct move for the Fed.
“I’m not surprised,” he said regarding the decision, according to multiple reports. “Holding the rates at this point was the right thing to do.”
The statement stood in stark contrast to one Trump delivered when speaking remotely to the World Economic Forum in Davos, Switzerland. In a Jan. 23 appearance, Trump said he would “demand that interest rates drop immediately.”
The president has no direct authority over the Fed, though he does nominate the chairman as well as other board members. Current Chair Jerome Powell is a Trump nominee, and a frequent target of the president’s criticism.
Markets don’t expect the Fed to lower rates until at least June. In his post-meeting news conference last Wednesday, Powell repeatedly asserted that the Fed doesn’t need to be in a “hurry” to lower further after shaving a full percentage point off the fed funds rate from September to December in 2024.
The Fed’s decision-making got potentially more complicated after Trump on Saturday said he would impose aggressive tariffs against Canada, Mexico and China, the three largest U.S. trading partners. Economists worry that the tariffs will drive up prices at a time when inflation has shown signs of easing.
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In a surprising turn of events, President Trump has approved the Federal Reserve’s decision to keep interest rates steady. This decision comes after months of criticizing the Fed for raising rates too quickly, causing tensions between the President and the central bank.
Trump’s approval of the Fed’s decision signals a shift in his stance on monetary policy, as he has previously called for lower interest rates to stimulate economic growth. This change in attitude could be a sign that the President is beginning to trust the Fed’s judgment and is willing to work with them to achieve economic stability.
The decision to hold interest rates steady was made at the Fed’s recent meeting, where they cited concerns about slowing global growth and trade tensions as reasons for their cautious approach. Trump’s approval of this decision could help ease concerns about potential interference in the Fed’s independence and provide reassurance to investors and markets.
Overall, this unexpected move by President Trump to support the Fed’s decision to keep interest rates steady could be a positive development for the economy and financial markets. It will be interesting to see how this newfound cooperation between the White House and the Federal Reserve plays out in the coming months.
Budget 2025-26 Explained Live: Nirmala Sitharaman is about to unveil her 8th consecutive Union Budget as the Union Finance Minister. (Express illustration by Angshuman Maity)
A day prior, the Economic Survey was tabled in Parliament, as is customary. It projected a growth rate of 6.3-6.8 per cent for the next financial year, stating, “Viksit Bharat@2047 envisions India as a developed nation by 2047, the centenary of our independence. This would entail sustained economic growth of close to 8 per cent every year for at least a decade.”
Scroll down for the Explained live blog, where our senior editors for Economy and Business will provide updates from the Budget speech with a side-by-side explanation of the provisions and what they mean for you.
As the Indian Union Budget for the financial year 2025-26 has been announced, it is important for taxpayers to understand the income tax slabs and rates for the upcoming year. Here’s a breakdown of the income tax slabs and rates for 2025-26:
1. For individuals below the age of 60:
– Up to Rs. 2.5 lakh: No tax
– Rs. 2.5 lakh to Rs. 5 lakh: 5%
– Rs. 5 lakh to Rs. 10 lakh: 10%
– Above Rs. 10 lakh: 20%
2. For individuals between the ages of 60 and 80 (senior citizens):
– Up to Rs. 3 lakh: No tax
– Rs. 3 lakh to Rs. 5 lakh: 5%
– Rs. 5 lakh to Rs. 10 lakh: 10%
– Above Rs. 10 lakh: 20%
3. For individuals above the age of 80 (super senior citizens):
– Up to Rs. 5 lakh: No tax
– Rs. 5 lakh to Rs. 10 lakh: 20%
– Above Rs. 10 lakh: 30%
It is important to note that these rates are subject to any changes made in the Union Budget and individuals are advised to consult with a tax professional for accurate information. Stay updated with the latest tax laws and ensure timely filing of your income tax returns for a hassle-free tax season.
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Income Tax Slabs 2025-26, India Union Budget, Income Tax Rates 2025-26, Income Tax Explained, Income Tax Update 2025-26, India Taxation System 2025-26
Will your income tax slab and the income tax rate change after Union Budget 2025? The latest income tax slabs for financial year 2025-26 are eagerly awaited by the common man, middle class and salaried taxpayers. Will FM Nirmala Sitharaman make the new income tax regime more lucrative for the common salaried individual taxpayers? Will the income tax slabs under the new income tax regime be tweaked further? The question on which income tax regime is better for you – new income tax regime vs old income tax regime – is dependent on the latest calculations for FY 2025-26 based on the income tax slabs and income tax rates announced in the Union Budget 2025.
What are the current income tax slabs under the new tax regime?
Up to INR 3 lakh – Nil
INR 3,00,001 to INR 7,00,000 – 5%
INR 7,00,001 to INR 10,00,000 – 10%
INR 10,00,001 to INR 12,00,000 – 15%
INR 12,00,001 to INR 15,00,000 – 20%
Above INR 15,00,000 – 30%
Since the introduction of the new income tax regime a few years ago, the Narendra Modi government has introduced several changes in it to encourage its adoption. The new income tax regime is essentially a regime that doesn’t allow you major tax deductions and exemptions, but favours taxpayers in the form of lower tax rates and more rationalised income tax slabs. For example; under the new income tax regime, common exemptions and deductions such as Section 80C, Section 80D, Section 80G, Section 80TTA, HRA, LTA are not allowed. However, the tax rates are lower and the income tax slabs are different. Under the new income tax regime, the 30% income tax slab kicks in at an income level above Rs 15 lakh, unlike the old tax regime where 30% tax is applicable above Rs 10 lakh.
When the new income tax regime was first introduced, standard deduction was not a part of it. However, eventually a Rs 50,000 standard deduction was allowed, which was hiked to Rs 75,000 in last year’s Budget. It’s important to note that under the old income tax regime, the standard deduction continues to be Rs 50,000.
One common ask of salaried taxpayers is that FM Sitharaman should allow popular exemptions and deductions such as Section 80C, HRA, LTA and Section 80D under the new income tax regime to make it more lucrative.
With the new income tax regime becoming the default tax regime, personal tax experts also expect that the Modi government may eventually do away with the old income tax regime. While that may not happen this year, the path towards phasing out the old income tax regime may be outlined in this year’s Union Budget. Also, a simplified Direct Tax Code is likely to be tabled in the Budget Parliament session, which may find mention in FM Sitharaman’s Budget speech.
As the Budget 2025 announcement draws near, there is anticipation and speculation about possible changes in income tax slabs and rates for the financial year 2025-26. Salaried taxpayers are hoping for some relief and tweaks in the new tax regime that could ease their tax burden.
Finance Minister Nirmala Sitharaman is expected to make some announcements regarding income tax slabs and rates in the upcoming budget. There are talks of a possible restructuring of the tax slabs to provide relief to middle-class taxpayers who have been facing the brunt of high tax rates in recent years.
With the economy still recovering from the impact of the pandemic, there is a hope that the government will take measures to boost disposable income for individuals and stimulate consumption. Changes in income tax slabs and rates could be one way to achieve this goal.
Stay tuned for live updates on Income Tax Slabs 2025-26 Budget 2025 as FM Sitharaman unveils the new tax regime and announces any changes that could impact salaried taxpayers. All eyes are on the budget as taxpayers eagerly await news of possible income tax relief.
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Income Tax Slabs 2025-26, Budget 2025 Live Updates, Income Tax Rates, Income Tax Relief, Salaried Taxpayers, New Tax Regime, FM Sitharaman, Income Tax Changes 2025
(LEX 18) — Data from the Centers for Disease Control and Prevention shows more parents are choosing to not vaccinate their children against certain diseases, like measles, polio, and whooping cough.
Fewer kindergarteners received the MMR (Measles, mumps and rubella) vaccine last year than before the pandemic. The CDC cites falling rates in both Kentucky and nationwide.
During the 2023-24 school year, just 90% of Kentucky kindergartners received the MMR vaccine, down from over 93% during the 2019-20 school year.
Nationwide, the number is down to 92.7%.
Both are below the CDC’s target of 95% vaccination rate for a healthy community immunization level.
Similar trends have continued for DTaP (diptheria, tetanus and pertussis) and polio vaccines since the pandemic.
It comes as the nation saw 284 cases of measles last year, and over 32,000 cases or whooping cough (pertussis).
This week, we put an all-call out to parents on Facebook, asking them if they are vaccinating their children or not, and why.
The answers were mixed.
“Parents have the right to choose what is best for their children,” one parent wrote.
“I trust science,” wrote another.
Just Wednesday, U.S. Health and Human Services Secretary nominee, Robert F. Kennedy, Jr., faced tough questions about his reputation as a vaccine skeptic during a confirmation hearing.
“I support the measles vaccine. I support the polio vaccine. I will do nothing as HHS secretary that makes it difficult or discourages people from taking it,” Kennedy said.
In Kentucky, MMR, Polio and DTaP are among vaccines required for children in school, but families can request religious or medical exemptions.
According to recent data released by the Centers for Disease Control and Prevention (CDC), vaccination rates for measles and polio among children in Kentucky are on the decline. This concerning trend is putting the health and safety of our children at risk.
Measles and polio are highly contagious diseases that can have serious consequences, including paralysis and even death. Vaccination is the most effective way to prevent the spread of these diseases and protect our children from harm.
It is crucial that parents and caregivers prioritize their children’s health by ensuring they are up to date on their vaccinations. By staying informed and taking action to vaccinate our children, we can help prevent the spread of these dangerous diseases and keep our communities safe.
Let’s work together to reverse this alarming trend and protect the health and well-being of our children. Vaccination saves lives – let’s make sure our kids are protected.
The European Central Bank cut interest rates on Thursday, for the fifth consecutive time, amid slowing growth in the region’s economy.
Policymakers lowered the bank’s key rate a quarter point to 2.75 percent as inflation remained relatively close to their 2 percent target. The moves comes a day after the U.S. Federal Reserve held rates steady, as the economic outlook of the United States and Europe diverge.
“The disinflation process is well on track,” the bank said in a statement, adding that there were signs that inflation would settle around the target on a “sustained basis.”
Annual inflation in the eurozone was 2.4 percent in December, slightly higher than the previous month as energy prices rose.
The central bank’s policymakers have differing perspectives about the outlook for inflation. Some emphasize signs of persistent inflationary pressures, such as price growth in the services sector, which has held stubbornly around 4 percent. Others, including the bank’s chief economist, Philip R. Lane, have said that if borrowing costs stay too high for too long then inflation could fall too low.
The eurozone’s economy stagnated in the fourth quarter of last year, weakening after it expanded 0.4 percent in the previous quarter, data published on Thursday showed.
The unexpected slump increases pressure on central bank officials to cut interest rates to help generate economic growth in a region that is troubled by its waning competitiveness with the United States and China and is extremely vulnerable to trade disruptions. The German economy, the bloc’s largest, shrank for the past two years as high energy costs and interest rates weighed on businesses and consumers, and political uncertainty ahead of elections next month has been exacerbating the issue.
But officials at the central bank have said that governments need to make cross-border business and investments easier, and not rely on monetary policy to stimulate economic growth.
The Federal Reserve held interest rates steady on Wednesday after officials said they would “move cautiously” amid lingering inflation risks and a strong labor market.
Last year, the Fed cut rates by a percentage point, the same as the European Central Bank. Looking ahead, the U.S. central bank is not expected to deliver many more rates cuts, despite President Trump pushing for them. His policies, such as cutting back on immigration and increasing import tariffs, could exacerbate inflationary pressures. Traders expect the eurozone’s central bank to cut rates at most of its meetings in the first half of this year.
So far, Europe has not been the central focus of Mr. Trump’s plans to increase tariffs. But a sense of how disruptive such an event would be came on Wednesday from Canada, where the central bank cut interest rates and dropped its guidance on future policy moves amid the threat of Mr. Trump’s proposed tariffs of 25 percent, which could be imposed as soon as Saturday.
The European Central Bank has made the decision to cut interest rates as economic growth in the eurozone continues to stagnate. This move comes as a response to mounting concerns about the region’s economic outlook and the impact of ongoing trade tensions.
The ECB announced that it would lower its deposit rate by 10 basis points to -0.5%, a record low, while also introducing a tiered deposit rate system to mitigate the adverse effects on banks. Additionally, the central bank stated that it plans to restart its quantitative easing program by purchasing €20 billion worth of bonds per month starting in November.
These measures are aimed at providing further stimulus to the eurozone economy, which has been struggling with weak growth and low inflation. The ECB’s decision reflects the growing sense of urgency among policymakers to address the challenges facing the region and prevent a further slowdown in economic activity.
However, some analysts have raised concerns about the effectiveness of these measures, noting that monetary policy alone may not be enough to boost growth in the face of global economic headwinds. It remains to be seen whether the ECB’s actions will be sufficient to revive the eurozone economy and restore confidence among investors and consumers.
WASHINGTON – The Federal Reserve paused its interest rate cutting campaign Wednesday and gave no signal it plans to lower rates again in the near term amid uncertainty spawned by inflation and President Donald Trump’s economic policies.
The decision to hold rates steady at a range of 4.25% to 4.5% could mark the beginning of an extended respite as the Fed assesses the course of inflation and awaits details on Trump’s trade and immigration plans. Alternatively, it could be a brief hiatus if inflation swiftly resumes a pullback and officials believe the President’s policies will modestly nudge up consumer prices.
“In considering the extent and timing of additional adjustments to the target range for the federal funds rate, the (Fed) will carefully assess incoming data, the evolving outlook, and the balance of risks,” the Fed said in a statement following a two-day meeting.
That mirrors the guidance Fed officials provided in December and signals “some patience” as they weigh further reductions in the key rate while navigating myriad economic and policy crosscurrents, according to Barclays.
Inflation broadly has eased since a pandemic-related surge but stayed elevated in recent months. The economy and job market have been remarkably resilient, though hiring has slowed substantially. And it’s unclear to what extent Trump will slap certain imports with tariffs and deport millions of immigrants who lack permanent legal status, and what the effects will be on the economy and inflation.
In its statement, the Fed removed its assertion in December that inflation “has made progress” toward the Fed’s 2% goal, simply noting that “inflation remains somewhat elevated.”
It also gave a nod to a job market that has picked up steam lately – with unemployment edging down to a historically low 4.1% – and doesn’t seem to need a boost from Fed rate cuts.
“The unemployment rate has stabilized at a low level in recent months, and labor market conditions remain solid,” the Fed said. That’s an upgrade from the previous statement that noted “labor market conditions have generally eased, and the unemployment rate has moved up but remains low.”
Noting that inflation is still above the Fed’s 2% goal while the economy and job market are strong, Fed Chair Jerome Powell told reporters Wednesday, We don’t need to be in a hurry to adjust” interest rates.
Trump accuses Fed, Powell of failing to stop inflation
After Wednesday’s Fed meeting, President Trump accused the Fed and Powell of creating and failing to stop pandemic-era inflation, which has fallen but has yet to return to the Fed’s 2% goal.
Trump, who appointed Powell as Fed chair in 2018, said he would lower inflation himself through various initiatives including energy production, American manufacturing and “slashing regulation.”
“The Fed has done a terrible job on Bank Regulation,” Trump said in a post on Truth Social. “Treasury is going to lead the effort to cut unnecessary Regulation, and will unleash lending for all American people and businesses.”
The president’s message also accused the Fed of being too focused on diversity, equity, and inclusion efforts and climate change.
Powell addresses Fed staffing levels
Tesla CEO and Department of Government Efficiency head Elon Musk last month accused the Fed of being “absurdly overstaffed.”
When asked for his thoughts, Powell said the Fed runs a “very careful budget process.”
“We owe that to the public, and we believe we do that,” he said.
Fed keeping an eye on Trump administration policy changes
Powell said the Fed would be carefully watching the Trump administration’s new stance on tariffs, immigration, fiscal policy and regulatory policy but would not rush its response.
“The (Fed) is very much in the mode of waiting to see what policies are enacted,” he said, adding there are many details about any tariffs that are unclear, including how they could affect consumer prices.
“It’s one thing to do that, to make assessments about what might happen and begin to think about what you might do in that case, but you don’t act until you see much more than we see now,” he added.
Stock market reaction
U.S. stocks fell after the Fed kept rates steady, as expected, but seemed to shift its view on inflation.
But while the Fed dropped its reference to inflation making “progress, Powell downplayed the change as a technical one and said recent inflation readings generally have been positive.
“The market is already jumping on the omission of inflation progress from the FOMC (Federal Open Market Committee) statement as a hawkish signal,” or wanting to fight inflation, said Seema Shah, chief global strategist at Principal Asset Management. Doves are less concerned with inflation.
The S&P 500 ended the day down 0.5% at 6,039.31; the Dow Jones Industrial Average dropped 0.31% to 44,713.52 and Nasdaq fell 0.5% to 19,632.32.
Fed ‘reviewing’ Trump’s anti-DEI orders
Powell at a 2021 conference said he believes the most successful organizations “are often the ones that have a strong and persistent commitment to diversity and inclusion.”
“We are working to align our policies with the executive orders as appropriate and consistent with applicable law,” he said.
Powell addresses Trump’s plan to ‘demand’ interest rate drop
When asked about Trump’s comment last week that he would “demand interest rates drop immediately,” Powell declined to comment on whether the president has made that demand or whether his comments have influenced policy.
“The public should be confident that we will continue to do our work as we have, focusing on using our tools to achieve our goals, and really keeping our heads down and doing our work,” Powell said, adding that he hasn’t been in contact with Trump.
Powell later reiterated that the Fed would continue to operate independently.
“That’s always what we’re going to do. And people should have confidence in that,” he said.
What causes the Fed to change interest rates?
The Fed raises interest rates or keeps them higher for longer to lower inflation by discouraging borrowing and economic activity. It cuts rates to juice a flagging economy or bring rates back to normal as inflation moderates.
What is the current Fed interest rate?
Wednesday’s decision to hold the Fed’s benchmark short-term rate steady comes after officials reduced it by a total percentage point at three straight meetings late last year. That has lowered borrowing costs for credit cards, some mortgages and auto and other loans, and sparked a stock market rally. It also has pushed down bank savings yields that were finally generating healthy returns.
Is inflation really going down?
After raising the federal funds rate to a 23-year high to curb a pandemic-related price surge in 2022 and 2023, the Fed slashed it as its preferred annual inflation measure fell from 5.6% in early 2022 to 2.8% in November – still above its 2% goal.
But inflation has been stuck at that mark in recent months and economists predict a report Friday will reveal a similar figure. That has led Fed officials to predict fewer rate cuts and a pause at this week’s meeting even apart from Trump’s policies.
Monthly cost increases, however, have been tamer and that should translate to milder annual price rises the first half of 2025 due to favorable comparisons with year-ago figures, Goldman Sachs said in a research note. That could give the Fed some leeway to cut rates again within months.
What’s the state of the job market?
Meanwhile, the labor market heated up in December, with employers adding 256,000 jobs and the unemployment rate dipping. Hiring, however, has slipped below pre-pandemic levels and net job growth is robust chiefly because of low layoffs, possibly foreshadowing a slowdown.
The government this week is expected to report the economy grew close to a sturdy 3% annual rate in the fourth quarter and for all of 2024.
How many rate cuts are expected in 2025?
Economist Ryan Sweet of Oxford Economics said the Fed could still agree to as many as three quarter point rate cuts this year, starting as soon as March, if inflation resumes its descent and the job market slows.
Fed Governor Chris Waller recently told CNBC he wouldn’t rule out a March rate cut. “As long as data comes in good on inflation, then I can certainly see cuts coming sooner than markets are pricing,” he said. He has said he doesn’t think tariffs will have a big impact on inflation.
Both Fed officials’ median estimate and futures markets forecast two rate cuts this year. Markets reckon the first will come in June.
Yet some Fed officials have said the recent high inflation readings suggest they should be cautious, especially in light of a solid economy that doesn’t appear to need the Fed’s help. Toss in tariffs that are likely to be passed along to consumers through higher prices and an immigration crackdown that shrinks the labor supply and could raise wages. Both policies could reignite inflation by the second half of the year, Barclays says.
Deutsche Bank estimates 25% tariffs on Canada and Mexico would raise inflation nearly a percentage point to 3.7% by the end of the year. Additional duties on China could lift inflation further.
As a result, Barclays predicts just one rate cut this year in June while Deutsche Bank doesn’t foresee any. Even a pivot to rate hikes is possible, Barclays says, if Trump’s planned tax cuts rev up the economy while tariffs and deportations boost inflation expectations that drive inflation itself higher.
Others project small price bump from tariffs, saying say a drop in imports would strengthen the dollar, lowering import prices for Americans and at least partly offsetting the duties.
Under a worst-case scenario, tariffs and deportations could both goose inflation and reduce consumer spending and economic growth. That would present a thorny dilemma for the Fed – keep rates high to beat back inflation or lower them to jolt the economy.
The Fed’s decision is its first during the Trump administration and comes nearly a week after he told the World Economic Forum he’ll “demand that interest rates drop immediately” after OPEC takes steps to lower oil prices. Such a move presumably would help push down inflation.
The remark set up a clash with Fed Chair Jerome Powell and the central bank, which is structured as an independent agency insulated from political influence so it can make decisions based on the best interests of the economy. Trump repeatedly badgered Powell to cut rates during his first term, though it didn’t appear to affect Fed moves.
How will Trump’s economic plans affect interest rates?
President Donald Trump’s plans to cut taxes, impose hefty tariffs on imports and deport millions of immigrants who lack permanent legal status have generated an unusual level of uncertainty about the course of the economy, inflation and interest rates.
In one predicted scenario, his policies could modestly stoke inflation while the economy slows but posts solid growth. That could move the Fed to order two, or possibly three, rate cuts this year.
Or, Trump’s initiatives could more emphatically reignite inflation while the economy grows sturdily or even heats up. That would probably mean fewer rate cuts from the Fed in 2025 — perhaps none. It might even put rate hikes back in play, forecasters say.
Another possibility: Trump’s blueprint could drive inflation higher while also weakening the economy, an unusual tandem that would pose a vexing dilemma for the Fed: Cut? Hike? Stand pat?
Time will tell.
Why would the Fed stop cutting interest rates?
The Fed chose to reduce its benchmark interest rate three times at consecutive meetings in late 2024.
Why stop now?
If the Fed pauses in its downward path on interest rates, the regulatory pause will have lot to do with inflation. Consumer prices have continued to rise in recent months, albeit at a slower pace than in most of 2022 or 2023. The Fed’s perfect-world inflation target is an annual rate of 2%. The current inflation rate, as of December, is 2.9%. The figure represents a five-month high.
Even as the Fed ordered the last of its 2024 rate cuts, at its December meeting, the panel forecast a significantly slower pace of cuts in 2025, citing lingering inflation and strong economic growth.
In that meeting, the Fed projected only two rate cuts in 2025, down from the four they had envisioned in September.
Will interest rates ever go down?
The Fed didn’t budge on interest rates, which means American consumers may have to wait a while to see borrowing costs go down on, well, pretty much everything.
“Anyone hoping for the Fed to ride in as the cavalry and rescue you from high interest rates anytime soon is going to be really disappointed,” said Matt Schulz, chief credit analyst at LendingTree, in an email. “That’s true whether you’re talking about mortgages, auto loans, credit cards or most anything else. That means it is maybe more important than ever to get that high-interest debt under control.”
The average annual interest rate on a new credit card is 24.26%, LendingTree reports. That would be a prime example of high-interest debt.
The average interest rate on a fixed-rate 30-year mortgage is 6.65%, according to Zillow. Bankrate puts the national average at 7.05%. Either way, mortgage rates are much higher now than three or four years ago, when they sat near historic lows.
Why does the Fed raise or lower interest rates?
“Part of the mission Congress has given to the Federal Reserve is to keep prices stable. This means not letting prices rise or fall too quickly,” the Federal Reserve Bank of Cleveland says on its website.
When inflation is running high, the Fed typically raises interest rates to slow the economy and bring inflation down. When inflation is too low, the Fed might lower interest rates to stimulate the economy and raise the inflation rate.
The central bank also lowers rates to stimulate a soft economy and job market, or just to give the economy some breathing room. That, economists say, is what the Fed has been doing over the past year.
Why did the Fed cut interest rates in 2024?
The Fed hiked interest rates to a 23-year high of 5.25% to 5.5% to fight a historic inflation surge. After holding rates at that level through parts of 2023 and 2024, the Fed began lowering its benchmark rate in September, signaling that inflation was coming under control. The annual inflation rate has eased from a peak of 9.1% in mid-2022 to 2.9% in December: much lower, but still above the Fed’s 2% inflationary goal.
A series of rate cuts brought the benchmark federal funds rate down a full percentage point between September and December 2024, to the current range of 4.25% to 4.5%.
The Federal Reserve has decided to keep interest rates unchanged in their latest meeting. This decision comes as no surprise to many analysts, as the Fed has been hesitant to make any major changes to monetary policy amidst ongoing economic uncertainty.
While some had speculated that the Fed may begin to raise rates in response to rising inflation and a strong labor market, the central bank has opted to maintain its current stance for the time being. This decision reflects the Fed’s cautious approach to managing the economy and ensuring a gradual and sustainable recovery.
The Fed’s decision to hold rates steady may come as a relief to borrowers, who will continue to benefit from low interest rates on loans and mortgages. However, savers may be disappointed as they will continue to earn minimal returns on their savings accounts.
Overall, the Fed’s decision to keep interest rates unchanged signals their commitment to supporting the economy and promoting long-term stability. As the economic outlook continues to evolve, the central bank will closely monitor key indicators and adjust its policies accordingly.
A for sale sign is displayed outside of a home for sale on August 16, 2024 in Los Angeles, California.
Patrick T. Fallon | AFP | Getty Images
Mortgage rates didn’t move last week, but demand for new home loans continued to weaken. Both homebuyers and current homeowners are hampered by today’s higher interest rates.
Total mortgage application volume decreased 2% from the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($766,550 or less) remained unchanged at 7.02%, with points increasing to 0.63 from 0.62 (including the origination fee) for loans with a 20% down payment.
Applications to refinance a home loan dropped 7% for the week and were 5% higher than the same week one year ago. Interest rates are now 24 basis points higher than they were a year ago, so there are precious few who can benefit. The vast majority of homeowners have mortgages with rates well below what is being offered today.
Applications for a mortgage to purchase a home fell 0.4% from one week earlier and were 7% lower than the same week one year ago.
“Purchase activity decreased slightly, but applications for FHA purchase loans were a bright spot, increasing by 2 percent,” said Joel Kan, vice president and deputy chief economist at the MBA.
“New and existing-home sales ended 2024 on a strong note, and if mortgage rates continue to stabilize and for-sale inventory loosens, we expect a gradual pick up in purchase activity in the coming months.”
Mortgage rates have not moved much to start this week either, and Wednesday’s Federal Reserve meeting is not expected to bring any surprises or tradeable news.
“Even Powell would be hard pressed to shake things up too much considering the mildly positive cue from inflation data and the ongoing policy uncertainty as a counterbalance,” wrote Matthew Graham, chief operating officer at Mortgage News Daily. “That said, one can never truly rule out a volatile reaction to a Powell presser, but the odds are certainly lower this time around.”
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The housing market continues to show signs of slowing down as mortgage demand drops even further, despite interest rates remaining relatively stable. According to the latest data from the Mortgage Bankers Association, mortgage applications fell 1.2% in the past week.
This decline in demand comes as a surprise to many experts, who had expected a surge in homebuying activity as interest rates hovered near historic lows. However, potential buyers seem to be holding off on making any major financial decisions amidst economic uncertainty and rising home prices.
While interest rates have remained steady, other factors such as tight inventory levels and increasing competition among buyers may be contributing to the decrease in mortgage demand. Additionally, some potential buyers may be hesitant to take on a mortgage in a volatile market.
As we head into the fall season, it will be interesting to see how the housing market continues to evolve. Will mortgage demand rebound, or will it continue to decline as economic conditions remain uncertain? Only time will tell.
High interest rates kept U.S. home sales in a deep freeze for much of last year. It could be a while before the market experiences much of a thaw.
Americans bought just over four million previously owned homes last year, the National Association of Realtors said on Friday. That was the fewest since 1995 and far below the annual pace of roughly five million that was typical before the coronavirus pandemic.
Sales picked up a bit toward the end of the year, rising 9.3 percent in December from a year earlier. That increase probably reflected the dip in mortgage rates in the summer and early fall — to about 6 percent on average for a 30-year fixed-rate mortgage — which made homes more affordable for buyers.
But mortgage rates have since rebounded to about 7 percent, and most forecasters don’t expect them to come down much in the next few months. That makes a significant increase in home sales unlikely this year, said Charlie Dougherty, an economist at Wells Fargo.
“You saw sales beginning to perk up a little bit, but it’s still sluggish,” he said. “I don’t think it’s indicative of a really forceful or energetic recovery that’s going to be coming.”
Home prices soared during the pandemic, as Americans sought more space and rock-bottom interest rates made it easy to borrow. Real-estate agents told of frenetic bidding wars as buyers competed for available homes.
That frenzy suddenly stopped when the rapid increase in inflation led the Federal Reserve to raise interest rates to their highest level in decades. Interest rates on a 30-year fixed-rate mortgage jumped, from below 3 percent in late 2021 to nearly 8 percent two years later.
The combination of high prices and high interest rates made homes unaffordable for many seeking to buy. And owners, many of whom had either bought their homes or refinanced their mortgages when rates were low, had little incentive to sell. That kept inventories low and prices high.
There are hints that the housing market might gradually be returning to normal, as life events — new jobs, new babies, marriages, divorces — force owners to sell, and as buyers adjust to higher borrowing costs. Inventories have edged up, and surveys show more owners plan to sell.
But unless mortgage rates fall, that normalization process is likely to be slow, Mr. Dougherty said.
“I think it’s probably safe to say that home sales have found a floor,” he said. But, he added, “if you look at the overall level, it’s still very, very weak.”
Existing-Home Sales in 2024 Were Slowest in Decades Amid High Mortgage Rates
The real estate market faced major challenges in 2024 as existing-home sales hit their slowest pace in decades. The main culprit? High mortgage rates that made it difficult for potential buyers to afford homes.
As interest rates soared, many buyers found themselves priced out of the market or unable to qualify for a mortgage. This led to a significant decrease in home sales, causing inventory levels to rise and prices to stagnate.
Experts predict that the sluggish housing market will continue into the next year, as mortgage rates show no signs of decreasing. This has left many homeowners stuck in their current properties, unable to move up or downsize.
While the market may be tough for buyers, it presents an opportunity for investors looking to buy properties at a discount. As sellers become more motivated to move their homes, there may be deals to be had for those willing to take a chance on the market.
Overall, the real estate market in 2024 was a challenging one, with high mortgage rates putting a damper on existing-home sales. Only time will tell if the market will rebound in the coming years or continue to struggle under the weight of rising interest rates.
Mortgage rates dropped for the first time in six weeks, sliding back below 7% as bond traders grew less jittery about President Donald Trump’s economic agenda.
The average 30-year fixed-rate mortgage rate was 6.96% through Wednesday, down from 7.04% a week earlier, according to Freddie Mac data. The average 15-year mortgage rate was 6.16%, declining from 6.27%.
“While affordability challenges remain, this is welcome news for potential homebuyers, as reflected in a corresponding uptick in purchase applications,” Sam Khater, Freddie Mac’s chief economist, said in a statement.
Applications for new home purchases rose 1% through Friday compared to a week earlier, though refinancing applications fell 3%, according to the Mortgage Bankers Association.
MBA’s chief economist Mike Fratantoni said in a statement that rates around 7% are “a key psychological level, which likely continues to slow the pace of activity for both refinances and purchases.”
The slight rate drop comes after Trump signed a slew of executive orders in his first days in office, but held off on slapping steep tariffs on goods imported from China, Mexico, and Canada. Ten-year Treasury yields, which closely track mortgage rates, fell as financial markets grew less worried that the president’s policies would worsen inflation.
Still, mortgage rates remain near the highest level since mid-2024, and tariffs are still likely to come. In a new forecast released on Wednesday, Fannie Mae sees mortgage rates staying relatively elevated and ending the year at 6.5%, up from 6.2%.
Ultimately, those higher rates are likely to keep existing home sales at or near a 30-year low for a third straight year, said Mark Palim, senior vice president and chief economist at Fannie Mae. Buyers are facing ongoing affordability challenges, and many would-be sellers are still opting to hold on to low mortgage rates instead of listing their homes — a phenomenon known as the “lock-in effect” — keeping market activity limited.
“The lock-in effect is likely to be a little more persistent than we had previously thought,” Palim told Yahoo Finance.
Claire Boston is a senior reporter for Yahoo Finance covering housing, mortgages, and home insurance.
In the first few days of his presidency, Donald Trump has decided to hold off on imposing tariffs on Chinese goods. This decision has led to a drop in mortgage rates, giving potential homebuyers a reason to celebrate.
With the uncertainty surrounding the economy and global trade, many experts were predicting an increase in mortgage rates. However, Trump’s decision to delay the tariffs has had a positive impact on the market.
This news is especially good for those who are in the process of buying a home or refinancing their mortgage. Lower rates mean lower monthly payments, making homeownership more affordable for many Americans.
While it’s unclear how long these lower rates will last, now may be a great time to take advantage of the current market conditions. If you’ve been considering buying a home or refinancing your mortgage, be sure to act quickly before rates start to rise again.
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