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Federal Reserve’s Powell says “more good data” could open door to interest rate cuts
Federal Reserve Chair Jerome Powell said Tuesday that “more good data” could open the door to interest rate cuts, citing recent reports that show that the labor market and inflation are continuing to cool.
The central bank left its benchmark interest rate unchanged at its June meeting, and penciled in only one rate cut in 2024 versus its previous forecast of three cuts this year, after digesting data showing inflation remains stubbornly high. Following a flurry of rate hikes, the Fed’s federal fund rate since July of 2023 has remained in a range of 5.25% to 5.5% — the highest in 23 years.
Speaking Tuesday morning at a Senate Banking Committee hearing, Powell stressed that the central bank wants to see further progress in bringing the annual inflation rate to about 2% before cutting rates, with the most recent consumer price index at 3.3%. But the chair also noted that the Fed is concerned with the risks of waiting too long to cut rates, noting that “elevated inflation is not the only risk we face.”
The next “likely direction seems to be …. that we loosen policy at the right moment,” Powell said at the hearing, adding that he believed it would be unlikely for the Fed to increase rates.
Recent economic indicators suggest “that conditions have returned to about where they stood on the eve of the pandemic: strong, but not overheated,” Powell added.
Powell’s comments suggest “a September interest rate cut remains very much in play,” noted Capital Economics in a Tuesday research note.
Recent economic data shows some signs of cooling. For instance, the jobless rate, while is still low, has increased slightly to 4.1% in June, while payroll job gains averaged about 222,000 per month in the first six months of 2024, he added. The jobs-to-workers gap has declined from a pandemic peak and now is at about its 2019 level, Powell noted.
The next big piece of economic data the Fed will digest arrives on Thursday with the release of the June consumer price index. Economists expect that inflation rose at a 3.1% annual rate last month, according to financial data firm FactSet.
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Rising home prices and high mortgage rates haven’t made buying a home easy these last few years. In fact, with affordability such a challenge, it’s only made shopping around for a lender that much more important.
It’s true: Comparing lenders can make a big difference when it comes to price. According to Freddie Mac, getting just four different mortgage rate quotes can save you about $1,200 per year.
But rates aren’t the only thing you should think about when choosing a lender. Want to make sure you pick the best mortgage company for your needs? See below for some of the best lenders for first-time homebuyers currently on the market.
Lock in a low mortgage interest rate here today.
Best mortgages for first-time homebuyers
Here are the best mortgage lenders for first-time homebuyers, broken down into six categories:
Best for low down payments: Veterans United
Veterans United exclusively offers VA home loans — which means all its loans require zero down payment. Though you’re welcome to put some money down, VA loans are one of the few mortgage options with no down payment requirement.
There is a catch, though: You’ll need to be a current military member, veteran, or spouse of one to qualify. Certain service requirements must be met as well. If you can do it, though, you’ll save yourself money both upfront (on the down payment) and in the long haul, as VA loans tend to have lower interest rates than other loan options.
Learn more about Veterans United here now.
Best for good credit: US Bank
If you have decent credit, US Bank might be a good option for your mortgage. The lender offers conventional, FHA and VA loans, and its rates are some of the lowest of lenders we analyzed. You can also apply fully online and get valuable closing cost discounts if you use other US Bank services.
Best for low credit: Cardinal Financial
Cardinal Financial is a good option if your credit score is on the lower end. The lender allows for scores as low as 620 on conventional loans and 580 on FHA, VA, and USDA loans. There are also jumbo loans — if you’re buying in a high-priced market or eyeing a more expensive property — and construction loans for buyers looking to build their own homes from the ground up.
Best for no lender fees: Better.com
Most lenders charge a variety of fees for processing your mortgage. These might include an origination fee, application fee, underwriting fee, and more. With Better.com mortgages, you won’t see any of these charges. The online lender charges no lender-side fees for underwriting, servicing, or originating its mortgages. There are other typical closing costs, though.
Best for online borrowing: First Mortgage Direct
First Mortgage Direct is a fully digital mortgage lender that lets you manage your mortgage process from start to finish all on the web. You can get a rate quote online, fill out an application, submit your documentation, and even close digitally, too. The lender also offers many online resources to help you along the way — things like informative videos, calculators, articles and more.
Best overall: New American Funding
New American Funding has something for everyone: conventional loans, government-backed loans, jumbo loans, construction loans, non-QM loans and more. There are even loans with customizable terms and options that can turn you into an all-cash buyer to make you more competitive. The lender also has a 4.1-star rating with the Better Business Bureau and a 4.6-star rating on Trustpilot.
Always shop around
Whether you’re buying your first home or your fifth, shopping around for your mortgage is important. If you need help doing so, consider enlisting a mortgage broker. These professionals can shop around on your behalf, help you compare lenders and loan options and ensure you get the best rate.