Consumer Debt

Mortgage rates rose slightly over the past week, with the U.S. economy continuing to show strength even as home sales remain tepid, HousingWire reported. According to the Mortgage Rates Center, the average 30-year rate for conforming loans stood at 7.11 percent on Tuesday, up slightly from 7.08 percent one week ago. Meanwhile, the 15-year conforming rate continued its steep rise and reached 6.99 percent on Tuesday after having reached a recent low point of 6.56 percent on June 21. “The bond market has been very wild the last few days, but the spreads have behaved as well, keeping rates from being higher than they would have been if we had 2023 mortgage spread levels,“ HousingWire Lead Analyst Logan Mohtashami said. “The 15-year loan might not be that appetizing for investors compared to the 30-year loans lately.“ Little is expected to change in the short term as the odds of the Federal Reserve lowering benchmark rates at the end of this month appear low. According to the CME Group’s FedWatch tool, market observers believe that there is a 91.2 percent chance of rates remaining the same after the next Federal Open Market Committee meeting on July 30-31.

In response to court rulings blocking key elements of the federal government’s new student loan repayment program, the Biden administration will be giving about 3 million borrowers a reprieve from their monthly payments, The Epoch Times reported. The 3 million borrowers eligible for the pause are enrolled in the income-driven repayment program dubbed SAVE and have a monthly payment that is more than zero, according to the U.S. Department of Education. About 4.5 million SAVE enrollees who qualify for zero-dollar payments because of low incomes will not be included in the pause. The payment pause is similar to the COVID-19 student loan relief that lasted for 3 1/2 years, from March 2020 through September 2023, during which borrowers didn’t have to pay monthly bills and interest didn’t accrue. Borrowers who are eligible for the new pause will be informed directly in the coming days. The announcement was made days after a federal judge in Kansas blocked the implementation of the final segment of the SAVE plan but declined to unwind the portions of it that are already in place. The blocked segment is a calculation formula update scheduled to take effect on July 1. It would have allowed borrowers with undergraduate loans to have their monthly payments capped at 5 percent of their discretionary income, down from the current 10 percent limit. (Subscription required to view article.)