Credit Sesame’s personal finance news roundup March 23, 2024. Stories, news, politics and events impacting personal finance during the past week.
- Fed leaves interest rate unchanged
- Rising interest costs work against US consumers
- Home buyers finally get a break
- Most consumers wary of government efforts on bank fees
- Late payments on credit accounts continue to rise
- Lackluster mortgage demand continues
- Data breaches and digital fraud are soaring
- Mortgage rates resumed upward course last week
Fed leaves interest rate unchanged
The Federal Reserve concluded its latest meeting by announcing it would make no immediate change in the Fed funds rate. It will maintain that rate between 5.25% and 5.5% for now. What changed is that the Fed’s latest economic predictions show it has become less optimistic about inflation. The Fed has raised its forecast for where inflation will be at the end of this year from 2.4% to 2.6%. It has also signaled that it expects to cut interest rates by less than originally expected over the next few years. The Fed’s forecast of where those rates will be at the end of 2025 and 2026 is now higher than in the previous set of projections. See details at FederalReserve.com.
Rising interest costs work against US consumers
As interest rates have risen over the past two years, the direct cost to consumers has exceeded the benefit. The total cost consumers pay on debt has risen by $420 billion. Meanwhile, the amount consumers earn in savings and investment interest has risen by just $280 billion. This differs from the pattern in past economic cycles. One reason is that consumers now hold a higher portion of their debt in credit card balances, which charge higher interest rates and respond more quickly to rising rates than loan debt. Also, consumers today own a higher proportion of stocks rather than interest-paying investments. Higher interest rates have at least benefitted consumers by bringing down the inflation rate over the past couple of years. See article at Yahoo.com.
Home buyers finally get a break
A settlement resulting from an anti-trust lawsuit against the National Association of Realtors may make it cheaper to buy a home in the future. The settlement will do away with the traditional standard 6% commission on a home sale. Instead, that commission will be negotiable. It remains to be seen how that will reset the size of commissions, but in other countries where those commissions are negotiable, they tend to average around 1% or 2%. Also, commissions will no longer be split evenly by the buyer’s and seller’s brokers. Instead, they will be negotiated separately by each party. On the downside, buyers may need to pay their brokers a flat fee rather than including the fee in the financing of the purchase. See Yahoo.com.
Most consumers wary of government efforts on bank fees
A survey of consumers found little support for the government’s efforts to curb debit card and overdraft fees. More than 80% of survey respondents are satisfied with the ease and speed of debit card transactions and the security of their financial information when using a debit card. Only 21% support the government’s efforts to lower debit card swipe fees, and only 12% think merchants will reduce prices if those fees are lowered. As for overdraft fees, 67% find overdraft protection valuable. 79% of those who paid an overdraft fee within the past year are glad the bank covered the overdraft rather than denying the payment. 78% of those enrolled in overdraft protection say they’ve never seriously considered opting out. See survey details at ABA.com.
Late payments on credit accounts continue to rise
Credit bureau TransUnion reported that serious delinquency rates rose across all products in February. TransUnion’s latest Credit Industry Snapshot found that serious delinquency rates rose for auto loans, credit cards, mortgages, and unsecured personal loans. Delinquency rates are especially alarming among subprime customers. 21.69% of subprime credit card accounts are now at least 90 days past due. See details at TransUnion.com.
Lackluster mortgage demand continues
Higher mortgage rates and limited supply continue to constrain mortgage applications. The Mortgage Bankers Association announced that, after seasonal adjustment, overall application volume was down by 1.6% last week. This includes a 3% decline in refinancing applications and a 1% decline in purchase applications. Overall, mortgage applications are down 14% from the same week one year ago. See details at MBA.org.
Data breaches and digital fraud are soaring
A new TransUnion report has found that the number of data breaches in the US has soared by 157% since 2020 to reach an all-time high. Lender exposure to fraudulent account creation has risen by 63% over the same period to $3.1 billion. 13.5% of all accounts created online involve fraudulent transactions. Retail, travel & leisure, and video gaming saw exceptionally high percentages of fraudulent account creation. See article at Yahoo.com.
Mortgage rates resumed upward course last week
After easing for two consecutive weeks, 30-year mortgage rates headed back upward last week. They rose by 0.13% to 6.87%. Mortgage rates have generally been heading higher so far in 2024. See rate details at FreddieMac.com.
Weekly news headlines from Credit Sesame
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