How the Stock Market’s Wild Swings Have Helped Homebuyers
The rollercoaster week on Wall Street could pay off nicely for some homebuyers.
The sharp selloff in global markets, caused by the economic uncertainty in China, caused investors running for safety to buy up U.S. government bonds, driving interest rates down. That sent the rate on benchmark 30-year fixed-rate mortgages down to its lowest level since May.
Related: The Financial Mistake That Can Cost Homeowners
Mortgage giant Freddie Mac said Thursday that the average for 30-year fixed-rate loans fell to 3.84 percent, with an average 0.6 points, over the week ending August 27. That’s down from 3.93 percent last week and 4.10 percent a year ago. For 15-year fixed-rate loans, the average was 3.06 percent, down from 3.15 percent last week and 3.25 percent a year ago.
The average on 30-year fixed-rate mortgages has now been below 4 percent for five straight weeks. Just how long they stay there will be determined in part by when the Federal Reserve decides to raise interest rates for the first time since 2006. Many economists had expected the Fed to raise rates next month — but that was before the stock market’s latest shakeup.
"There are indications, though, that the unsettled state of global markets will make the Fed think twice before taking any action on short-term interest rates in September,” Sean Becketti, Freddie Mac’s chief economist, said in a statement. “If that's the case, the 30-year mortgage rate may remain subdued in the short-to-medium term, providing support for continued strength in the housing sector."
Related: Rate-Hike Havoc: Can the Fed Ignore This Market Rout?
Greg McBride, chief financial analyst with Bankrate.com, said mortgage rates may trend a bit higher from here as financial markets settle down, but he added that the Fed’s hike, whenever it comes, isn’t going to dramatically affect mortgage rates that are still historically low.
“That the initial move by the Fed is to a large extent already reflected in mortgage rates,” McBride said. “You might see a little bit of a further bump, but not much. Mortgage rates are not going to skyrocket. That’s the main point. Increases that we see in mortgage rates in the coming months are likely to be very limited."
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Chart of the Day: Why US Fertility Rates Are Falling
U.S. fertility rates have fallen to record lows for two straight years. “Because the fertility rate subtly shapes many major issues of the day — including immigration, education, housing, the labor supply, the social safety net and support for working families — there’s a lot of concern about why today’s young adults aren’t having as many children,” Claire Cain Miller explains at The New York Times’ Upshot. “So we asked them.”
Here are some results of the Times’ survey, conducted with Morning Consult. Read the full Times story for more details.
A Record Low 47% of US Adults Say They're 'Extremely Proud' to Be American
Gallup says that, for the first time in the 18 years it’s been asking U.S. adults how proud they are to be Americans, fewer than half say they are "extremely proud." Just 47 percent now say they’re extremely proud, down from 70 percent in 2003.
Another 25 percent say they’re “very proud” — but the combined 72 percent who say they’re extremely or very proud is also the lowest Gallup has recorded. Pride levels among liberals and Democrats have plunged since 2017. Overall, 74 percent of Republicans and just 32 percent of Democrats call themselves “extremely proud” to be American.
Pfizer Has Raised Prices on 100 of Its Products
Weeks after President Trump said that drugmakers were about to implement “voluntary massive drops in prices” — reductions that have yet to materialize — Pfizer has raised prices on 100 of its products, The Financial Times’s David Crow reports:
“The increases were effective as of July 1 and in most cases were more than 9 per cent — well above the rate of inflation in the US, which is running at about 2 per cent. … Pfizer, the largest standalone drugmaker in the US, did decrease the prices of five products by between 16 per cent and 44 per cent, according to the figures.”
Crow notes that Pfizer also raised prices on many of its medicines in January, meaning that some prices have been hiked by nearly 20 percent this year. The drugmaker said that it was only changing prices on 10 percent of its medicines and that list prices did not reflect what most patients or insurers actually paid. The net price increase after rebates and discounts was expected to be in the “low single digits,” the company told the FT.
Chart of the Day: Pass-Through Tax Deductions Made Easy
The Republican tax overhaul was supposed to simplify the tax code, but most experts say it fell well short of the goal. Martin Sullivan, chief economist at Tax Analysts, tweeted out a chart of the analysis required to determine whether income qualifies for the passthrough tax deduction of 20 percent, and as you’ll see, it’s anything but simple.
A Conservative Bashes GOP Dysfunction on Spending Cuts
Brian Riedl, a senior fellow at the conservative Manhattan Institute, offers a blistering critique of congressional Republican’s problems cutting spending:
Since the Republicans took the House in 2011, nearly every annual budget blueprint has promised to balance the budget within a decade with anywhere from $5 trillion to $8 trillion in spending cuts. And yet, you may have noticed, the budget has not moved towards balance. This is because the budget merely sets a broad fiscal goal. To actually cut spending, Congress must follow up with specific legislation to reform Medicare, Medicaid, and all the other targeted programs. In reality, most lawmakers who pass these budgets have no intention whatsoever of cutting this spending. As soon as the budget is passed, the targets are forgotten. The spending-cut legislation is never even drafted, much less voted on.
The annual budget exercise is thus a cynical exercise in symbolism. Congress calculates how much spending must be cut over ten years to balance the budget. Then they pass legislation setting a goal of cutting that amount. Then they move on to other business. It’s like a baseball team announcing that they voted to win the next World Series, and then not showing up to play the season.
Read the full piece at National Review.