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Tag: U.S. Economy

  • It’s bad enough mortgage rates are over 7% – now it’s harder to qualify for a home loan

    It’s bad enough mortgage rates are over 7% – now it’s harder to qualify for a home loan

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    JB Reed | Bloomberg | Getty Images

    It’s a double whammy for would-be homebuyers. Not only are interest rates soaring, it’s getting harder to qualify for a loan.

    The average rate on the popular 30-year fixed mortgage climbed over 7% at the end of last week, according to Mortgage News Daily, and is expected to hit around 7.125% on Tuesday. It’s been over 7% for several days.

    Meanwhile, mortgage credit availability is now at the lowest level since March 2013, which was when housing was in a slow recovery from the financial crisis at the end of the prior decade. It fell for the seventh consecutive month in September, down 5.4% from August, according to a monthly index from the Mortgage Bankers Association.

    While lenders may be desperate for business, as mortgage demand drops due to higher rates, they are also more concerned about a weaker economy, which could lead to higher delinquencies. Executives and economists have warned that the U.S. could fall into a recession in the coming months as the Federal Reserve hikes rates to battle high inflation.

    “There was a smaller appetite for lower credit score and high [loan-to-value] loan programs,” Joel Kan, a Mortgage Bankers Association economist, said in a release.

    Mortgage delinquencies, at the moment, sit near record lows. While new foreclosure actions rose 15% from July to August, they were still 44% below pre-pandemic levels, according to Black Knight, a mortgage software and analytics company.

    Credit availability fell the most for jumbo loans, which more borrowers today have to use due to higher home prices, according to the Mortgage Bankers Association. Higher prices also have more borrowers turning to adjustable-rate mortgages, because they offer lower interest rates. These loan rates can be fixed for up to 10 years, but they are considered riskier mortgages.

    Borrowers are clearly concerned that mortgage rates will move even higher. While mortgage rates don’t follow the federal funds rate exactly, they are influenced heavily by the Fed’s policy.

    “The Fed is determined to hike rates as high as it can and keep them there as long as it can, even if that means the economy suffers,” Matthew Graham, chief operating officer of Mortgage News Daily, wrote on its website.

    Graham noted the Fed is not considering mortgage rates or the housing market because home prices are overheated and a correction is “good and necessary.”

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  • U.S. officials plan to push for price cap on Russian oil at this week’s IMF meetings

    U.S. officials plan to push for price cap on Russian oil at this week’s IMF meetings

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    U.S. Treasury Secretary Janet Yellen talks to reporters during a news conference in the Cash Room at the Treasury Department on April 21, 2022 in Washington, DC.

    Chip Somodevilla | Getty Images

    U.S. Treasury officials plan to press ahead at this week’s IMF meetings with a cap on the price of Russian oil, despite Wednesday’s decision by OPEC+ to cut oil production that’s already driven gas prices higher.

    Treasury Secretary Janet Yellen and Deputy Treasury Secretary Wally Adeyemo will discuss the cap with other world finance ministers at the annual meetings of the IMF and World Bank that run Monday through Sunday in Washington, D.C.

    OPEC+, the international governing organization of oil exporting countries which counts Russia among its expanded membership, announced an expected output cut of 2 million barrels per day last week, a move the Biden administration reportedly tried to block amid rising fuel costs.

    But the cutback has no bearing on the G-7’s strategy to deny Russia a substantial income source to continue funding its war in Ukraine by capping the price of the country’s oil, a senior Treasury official told reporters Monday.

    “We’ve been working on the price cap for a number of months. We’re continuing to move forward with our coalition in the design and finalization of that and that would have been happening in any case,” the official said.

    G-7 finance ministers announced the price cap last month.

    Higher gas prices from the OPEC+ decision will be “felt particularly by low- and middle-income countries, which are already bearing the brunt of the increase in global energy prices,” the official said.

    Adeyemo will is scheduled on Friday to brief member countries on the impact their sanctions have had on Russia’s military supply chains. The Deputy Treasury Secretary will also consult with senior officials from over 20 participating countries, including Canada, the U.K. and the E.U., on how to redouble those efforts, according to senior Treasury officials.

    Yellen plans to call on the coalition to further restrict Russian President Vladimir Putin‘s access to capital and military equipment needed to continue the war in Ukraine.

    After Russia launched coordinated missile strikes across Ukraine Monday, India and China, which have refrained from outright condemning Russia’s invasion, called for a peaceful resolution to the crisis. Each country has sought to distance itself from Putin even as they continue to support Russia by buying its oil.

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  • Allianz Chief Economic Adviser El-Erian believes core inflation ‘is still going up’

    Allianz Chief Economic Adviser El-Erian believes core inflation ‘is still going up’

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    Ahead of the release of the latest consumer price index reading this week, Allianz Chief Economic Adviser Mohamed El-Erian told CBS’ “Face The Nation” Sunday that he predicts headline inflation “will probably come down to about 8%,” but that core inflation “is still going up.”

    Core inflation is what measures the drivers of inflation and how broad they are, so El-Erian said an increase in core inflation means “we still have an inflation issue.”

    Even if core inflation is still on the rise, however, El-Erian said it will eventually come down.

    “The question is, does it come down with a slowdown in the economy or a major recession?” he said on “Face the Nation.”

    The oil producer group OPEC+ announced its largest supply cut since 2020 on Wednesday, and El-Erian said this decision “does hurt the U.S.,” as it risks causing inflation to increase again. But he said the cut did not come as a surprise since the group is looking to protect oil prices in the face of declining demand.

    “That’s what they do,” he said. “But it’s certainly not good news for the U.S. economy.”

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  • European countries face an air-conditioning Catch-22 after its red hot, record-breaking summer

    European countries face an air-conditioning Catch-22 after its red hot, record-breaking summer

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    Europe is facing a tough winter, as inflation and energy prices continue to rise. The continent also faces tough decisions following its scorching hot summer

    Heat waves in Europe broke records, sparked widespread wildfires and even damaged a busy runway at a London airport.

    Unlike the U.S., European countries don’t rely on air conditioning to cope with high temperatures. Fewer than 10% of households in Europe owned air conditioners as of 2016, according to the International Energy Agency.

    “If we were looking at the beginning of this summer, it was fairly quiet. We were getting typically 20 inquiries a day maybe for people interested in air conditioning,” said Richard Salmon, director of The Air Conditioning Co., which is based in central London.

    Demand for air conditioners spiked as temperatures crossed 100 degrees Fahrenheit in the United Kingdom.

    “I’ve been here for 15 years and I’ve never seen anything quite like it,” Salmon said.

    As countries around the globe rapidly adopt ways to cool their homes and businesses, it becomes more important to install cooling technology that doesn’t contribute to higher temperatures in the future via carbon emissions.

    “It is clear that if no effective mitigation strategies will be put in place on a global scale to cut emissions then this kind of summer and these kinds of events will become the new norm,” said Andrea Toreti, senior climate researcher at the European Commission, the executive body of the EU.

    Watch the video to learn more about why large parts of Europe don’t have air conditioning, how ACs contribute to climate change, and new kinds of efficient cooling technologies that can mitigate carbon emissions.

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  • U.S. will screen people arriving from Uganda for Ebola as East African nation battles outbreak

    U.S. will screen people arriving from Uganda for Ebola as East African nation battles outbreak

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    The U.S. will rout and screen passengers for Ebola at five designated airports if they have traveled in Uganda within three weeks prior to their arrival, federal officials said on Thursday.

    Uganda, a nation in East Africa, is battling a deadly outbreak of Ebola with 63 confirmed and probable cases and 29 deaths, according to the World Health Organization. No cases of Ebola have been reported in the U.S., according to the Centers for Disease Control and Prevention.

    The CDC is working closely with Uganda’s health ministry and the WHO to respond to the outbreak.

    The U.S. Embassy in Uganda, in a health alert Thursday, said passengers who have been in the East African nation within 21 days of their arrival in the U.S. will be routed to one of five airports: New York JFK, Newark, Atlanta, Chicago O’Hare or Washington Dulles.

    Passengers arriving from Uganda at those airports will undergo temperature checks and verification of their contact data, a federal health official said. Airlines will send passenger information to the Centers for Disease Control and Prevention so the agency can conduct health follow ups, the official said. Contact information will also be sent to state health departments so they can conduct follow ups locally.

    Uganda is battling an outbreak caused by a strain of Ebola called Sudan ebolavirus. The virus spreads through direct contact with body fluids of a person who has fallen ill with the virus or died from it, as well as infected animals and contaminated objects, according to CDC. Ebola does not spread through airborne transmission, the health agency said.

    People infected with ebolavirus are not contagious until symptoms appear, which can take anywhere from two to 21 days after contact with the virus, according to CDC. On average, it takes about 8 to 10 days for symptoms to appear.

    Symptoms include unexplained hemorrhaging, bleeding or bruising; fever; severe headache and muscle and joint pain; stomach pain, diarrhea and vomiting. Other symptoms include red eyes, skin rash and hiccups.

    There is no vaccine licensed by the Food and Drug Administration to protect against the Sudan ebolavirus strain. The FDA approved a vaccine to combat Zaire ebolavirus based on animal studies, but it’s not expected to protect against the Sudan strain, according to CDC. There is also no FDA approved treatment for Sudan ebolavirus.

    The CDC, in a health alert Thursday, said health-care providers should be on the alert for any patients suspected of having Ebola. Physicians and other clinicians should obtain a detailed travel history for any patients suspected of having the disease, particularly for people who have been to the regions in Uganda where there is an outbreak.

    This is breaking news. Please check back for updates.

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