Fitch Warns of Rising Mortgage-Bond Risk Due to Extreme Weather

For analysts at Fitch Ratings, the recent demolition of a Swiss village by a glacier is fresh proof that climate change is altering the laws of mortgage risk.
The world looked on in shock last month as 3 million cubic meters of rock and mud buried the Swiss village of Blatten. The Alps are already about 2C hotter than they were at the time of the industrial revolution, meaning glaciers are continuing to thaw at a dangerous pace. And with global warming currently on track to be roughly double the critical threshold of 1.5, scientists warn that the risk of property damage caused by floods, mudslides, fires and storms is growing by the day.

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Yahoo

2 hours ago

• Yahoo

How to get a mortgage

To prepare for getting a mortgage, figure out what you can realistically afford, how much you'll have saved for a down payment and if you need to improve your credit score before applying. Comparing offers from multiple lenders — at least three — could save you a significant amount of money. Along with your down payment, you'll need to pay closing costs, which typically total 2 to 5 percent of the loan principal. For most Americans, taking out a mortgage makes buying a home possible. But how do you get a mortgage? This guide breaks down the process so you'll know what to expect. 'Having a strong credit history and credit score is important because it means you can qualify for favorable rates and terms when applying for a loan,' says Rod Griffin, senior director of public education and advocacy for Experian, one of the three major credit reporting agencies. The best loan offers go to borrowers with credit scores in the 700s. That's because a strong score demonstrates you can responsibly manage your debt. If your credit score is on the lower side, you could still get a loan, but you'll likely pay a higher interest rate. To improve your credit before applying for your mortgage, Griffin recommends: Making all payments on time and reducing your credit card balances: The payment history on your report goes back two years or longer, so start now if you can. Bringing any past-due accounts current: Past-due accounts will sink your score. Making any back payments and making on-time payments going forward can limit some of the damage. Reviewing your credit reports: You can check your credit reports weekly for free at Look for errors, and if you spot any, contact the reporting bureau immediately. For example, an error might be a paid-off loan that hasn't been recorded as such or an incorrect address. Checking your credit score: This will show you a list of the top factors impacting it, which can help you understand how to get your credit in shape, if needed. Learn more: How to improve your credit score for a mortgage One way to determine how much house you can afford is to calculate your debt-to-income (DTI) ratio. This measures the amount of your monthly gross income that's taken up by recurring debt payments. The lower your DTI ratio, the more room you'll have in your budget for expenses not related to your home. 'The last thing you want to do is get locked into a mortgage payment that limits your lifestyle flexibility and keeps you from accomplishing your goals,' says Andrea Woroch, a Bakersfield, California-based personal finance and budgeting authority. You can determine how much house you can afford by using Bankrate's calculator, which factors in your income, monthly obligations, estimated down payment and other mortgage details. Learn more: How much house can I afford? Your first savings goal should be enough for a sufficient down payment. Saving for a down payment is crucial … preferably 20 percent to reduce your mortgage loan, qualify for a better interest rate and avoid having to pay private mortgage insurance. However, you don't need 20 percent down to buy a home. Here are the minimum down payment requirements for several popular loan types. Conventional loan 3% FHA loan 3.5% VA loan Typically 0% USDA loan 0% It's equally important to build up your cash reserves. Many experts recommend having the equivalent of six months' worth of mortgage payments in a savings account, in addition to your down payment. This can come in handy if you lose your job or have another financial emergency. Don't forget to factor in closing costs, which are the fees you'll pay to finalize the mortgage. These typically total between 2 and 5 percent of the loan's principal. You'll also be responsible for escrow payments — and you should expect to spend around 1 to 4 percent of the home's price on annual maintenance and repair costs. Learn more: How much is a down payment on a house? Once your credit score and savings are in a good place, start searching for the right kind of mortgage for your situation. The main types of mortgages include: Conventional loans: Conventional loans aren't guaranteed or insured by the government. You'll need at least a 620 credit score and a down payment of 3 to 5 percent to qualify. FHA loans: FHA loans are insured by the Federal Housing Agency (FHA) and have more flexible financial requirements than conventional loans. If you have a credit score of at least 580, they require a 3.5 percent down payment. VA loans: VA loans are guaranteed by the U.S. Department of Veterans Affairs (VA) and are available to qualifying military members. They typically have no down payment requirement, and credit score requirements vary by lender. USDA loans: USDA loans, guaranteed by the U.S. Department of Agriculture (USDA), are available for properties in designated rural areas. They have no down payment requirement, and credit score requirements vary by lender. Jumbo loans: Jumbo loans are conventional loans for properties whose price tags exceed the federal threshold set for conforming loans: $806,500 in most parts of the country or $1,209,750 in more expensive areas. These loans often come with higher minimum credit score and down payment requirements. Look at the interest rates, as well as the annual percentage rate (APR), which includes the mortgage rate and some fees. Even a small difference in interest rates can result in big savings over the long run. Also, consider factors like whether you'll have to pay for mortgage insurance and for how long. If you're a first-time homebuyer, you might consider an FHA loan, which requires only 3.5 percent down if you have at least a 580 credit score. If you have a score above 620, a conventional loan could be a better fit. Mortgages are also differentiated by their rate types and term lengths: Term length: Most home loans have 15- or 30-year terms, although there are 10-year, 20-year, 25-year and even 40-year mortgages. Fixed-rate mortgage: A fixed-rate mortgage has the same interest rate throughout the length of the loan, so every principal and interest payment will be the same. This predictability makes fixed-rate mortgages the most popular option, with the 30-year fixed-rate mortgage being the standard in the United States. Adjustable-rate mortgage: Adjustable-rate mortgages (ARMs) are 30-year mortgages that start with a lower, introductory interest rate. After this period, the rate adjusts up or down based on a specified market index. You may see these loans referred to as 5/6 ARMs, 7/6 ARMs or 10/1 ARMs, for example. Learn more: Compare current mortgage rates Once you've decided on the type of mortgage, it's time to find a mortgage lender. 'Speak with friends, family members and your agent and ask for referrals,' says Guy Silas, branch manager for the Rockville, Maryland office of Embrace Home Loans. 'Also, look on rating sites, perform internet research and invest the time to truly read consumer reviews on lenders.' '[Your] decision should be based on more than simply price and interest rate,' Silas says. 'You will rely heavily on your lender for accurate preapproval information, assistance with your agent in contract negotiations and trusted advice.' Reading lender reviews can help you learn about the pros and cons of various lenders, helping you narrow the field. If you're not sure exactly what to look for, a mortgage broker can help you navigate your loan options and possibly get more favorable terms than you'd be able to secure on your own. Remember that interest rates, fees and terms can vary greatly from lender to lender. Bankrate can help you compare rates from different lenders. Learn more: Bankrate's best mortgage lenders Once you've settled on a lender, get preapproved for a mortgage. With preapproval, the lender will review your finances to determine if you're eligible for funding and how much it might be willing to lend you. 'Many sellers won't entertain offers from someone who hasn't already secured a preapproval,' Griffin says. 'Getting preapproved is also important because you'll know exactly how much money you're approved to borrow.' Be mindful that mortgage preapproval differs from prequalification. A preapproval involves much more documentation and a hard credit check. Mortgage prequalification is less formal and is essentially a way for a lender to tell you that you'd be a good applicant. Still, preapproval doesn't guarantee you'll get the mortgage. You won't know that until you've made an offer on a house and successfully gone through mortgage underwriting. With a preapproval in hand, you can begin seriously searching for a property. When you find a home that you're interested in, be ready to pounce. 'It's essential to know what you're looking for and what is feasible in your price range,' says Katsiaryna Bardos, professor of finance at Fairfield University in Fairfield, Connecticut. 'Spend time examining the housing inventory, and be prepared to move quickly once the house that meets your criteria goes on the market.' If you've found a home you're interested in purchasing, you're ready to complete a mortgage application. You can complete most applications online, but it may be more efficient to apply with a loan officer in person or over the phone. When you apply, your lender will perform a credit check and request documents from you, such as: Proof of identification: Including your driver's license, Social Security card and/or other forms of government-issued ID Proof of income: Including paystubs, W-2s, 1099s, receipts of alimony and/or child support and rental income Proof of assets: Bank statements, investment and/or retirement account statements, bonds, stocks, etc. Gift letters: If a friend or relative gives you money for a down payment, you'll need to submit a gift letter. Learn more: What is a mortgage application Even though you've been preapproved for a loan, that doesn't mean you'll get financing from the lender. The final decision comes from the lender's underwriting department, which evaluates the risk of each prospective borrower and the nature of the property, then determines the loan amount, interest rate and other terms. Here are some steps involved in the underwriting process: A loan officer will confirm the information you provided during the application process. After your offer on a home is accepted, the lender will order an appraisal of the property to determine whether the amount in your offer is appropriate. The appraised value depends on many factors, including the home's condition and comparable properties, or 'comps,' in the neighborhood. A title company will conduct a title search to ensure the property can be transferred, and a title insurer will issue an insurance policy that guarantees the accuracy of this research. 'After all your financial information is gathered, this information is submitted to an underwriter — a person or committee that makes credit determinations,' says Bruce Ailion, an Atlanta-based real estate attorney and realtor. 'That determination will either be yes, no or a request for more information from you.' As you're waiting, keep these tips in mind: If your lender does have questions, answer them promptly to avoid holding up your approval. If you can avoid it, don't make any large purchases or apply for additional credit during underwriting. Any changes to your financial situation could jeopardize the loan. Once you've been officially approved for a mortgage, you just need to complete the closing. 'The closing process differs a bit from state to state,' Ailion says. 'Mainly, it involves confirming the seller has ownership and is authorized to transfer title, determining if there are other claims against the property that must be paid off, collecting the money from the buyer and distributing it to the seller after deducting and paying other charges and fees.' There are many expenses that accompany the closing. These typically include: Appraisal fee: Cost for a professional appraiser to determine the value of the property you're purchasing, often between $300 and $400 Credit check fee: Cost of running your credit report, usually less than $30 Origination or underwriting fee: Covers the cost of creating and processing your loan, usually 0.5 percent to 1 percent of the loan amount Title insurance fees: Covers title and settlement services, often equal to 0.5 percent to 1 percent of the purchase price Prepaids: Expenses you'll cover upfront, such as property taxes and homeowners insurance premiums Attorney fee: Usually a flat fee that you'll pay if your state requires an attorney be present at closing Recording fees: Flat fee to record the transaction with the proper local authority Along with paying closing costs, you'll review and sign lots of documentation at the closing, including paperwork detailing how funds are disbursed. The closing or settlement agent will also enter the transaction into the public record. The process to get a mortgage — also known as the 'time to close' — takes 41 days on average as of June 2025, according to ICE Mortgage Technology. What income is required to get a mortgage? The income required to get a mortgage depends on how large a mortgage you need and how much debt you already have. Lenders like to see a DTI ratio of no more than 36 percent, although some may approve up to 50 percent in some cases. How do I qualify for a mortgage? You'll need to meet the eligibility criteria for the specific type of mortgage you're getting. This includes parameters around credit score, debt and down payment. For an FHA loan, for example, if you have a credit score of at least 580, you'll need a down payment of at least 3.5 percent. Where can I get a mortgage? You can get a mortgage through a direct or retail mortgage lender, such as a credit union, bank or online lender; through a mortgage broker; or another type of lender. Start shopping for a mortgage by comparing top offers on mortgage rates. What mortgage questions should I ask when shopping around? Don't be shy when it comes to asking mortgage lenders questions as you shop around. Ask for help identifying what kind of mortgage loan may be the best fit for your situation. You may also wish to ask about any down payment assistance programs you qualify for. While asking about interest rates can be beneficial, keep in mind some lenders will not disclose a rate until you've applied for a prequalification or preapproval. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data

CNN

6 hours ago

• CNN

So, has anything actually gotten more expensive because of Trump's tariffs?

Source: CNN Predictions from mainstream economists were dire after President Donald Trump launched his tariff campaign just a couple weeks after he began his second term in office: Prices would rise — sharply — they said, reigniting an inflation crisis that tens of millions of Americans had elected him to solve. But that massive, tariff-induced inflation spike hasn't materialized. Not even close. Not yet, anyway. Consumer prices rose just 2.4%, annually, last month, according to the Bureau of Labor Statistics. That was less than economists had expected, and only slightly higher than the 2.3% rate in April, which was the US economy's lowest inflation since February 2021. According to the Personal Consumption Expenditures price index most closely followed by the Federal Reserve, core inflation — which strips out volatile items like food and gas prices — fell to 2.5% in April. That was the lowest reading since March 2021. That's a far cry from what economists and consumers have predicted. Month after month, inflation has fallen short of Wall Street's expectations, as American businesses said they would be forced to hike prices as a result of historically high tariffs. America's effective tariff rate is now 14.1%, according to Fitch Ratings, up from 2.3% last year. That means Trump raised taxes on imported goods by nearly 12 percentage points in 2025. Economists expected substantial inflation increases as a result. Goldman Sachs analysts last month said core goods inflation could hit 6.3% this year and consumer prices would surge 3.7% by early 2026. JPMorgan economists said core inflation would nearly double by the end of this year. And American consumers in May expected prices to rise an alarming 6.6% this year, according to sentiment surveys from the University of Michigan. That prediction fell in June, but consumers still expect inflation to hit 5.1% in 2025. So what happened? Are economists just really bad at their jobs? Not quite. Their predictions may yet come true — and economists are largely cleaving to their bets. America's economy is enormous and complex, and predicting when prices will rise and fall can be an extremely tricky business — particularly when factoring in the on-again, off-again nature of Trump's tariff regime. Still, tariffs through mid-June haven't caused inflation to spike. Love tariffs or hate them, there's no denying inflation is lower now than when Trump took office. Fed Chair Jerome Powell on Wednesday said just a few items are growing in price as a result of tariffs, including electronics that come from China. He said PCs and A/V equipment have become more expensive because of Trump's trade war. But the price increases aren't widespread yet, Powell noted, because stores are still working through the inventory that came in to their warehouses before Trump put tariffs in place. 'Goods being sold at retailers today may have been imported several months ago, before tariffs were imposed,' Powell said. Research firm Telsey Advisory Group, which has been tracking the prices of 80 select consumer items across a wide variety of retail categories, reported this week that just 19 products it has tracked have gained in price since mid-April — and 16 items' prices fell. Similarly, the New York Times' Wirecutter, which recommends consumer products, tracked the prices for 40 of its top picks over the course of two months and found this week that the vast majority didn't change price at all: 10 gained in price and only half of those gained more than 7%. 'There haven't been many significant upticks in prices as of yet given that many retailers are still selling through their lower-cost inventory,' Dana Telsey, CEO and chief research officer of Telsey Advisory Group told CNN. Even autos, many of which are subject to a 25% tariff, plus a tariff of up to 25% on some imported auto parts, haven't gained in price — they've fallen . New car prices fell 0.2% in May, according to car-buying research site Edmunds, and they rose only 2.5% compared to the pre-tariff period in March. Both new and used car prices fell in May, according to the BLS' Consumer Price Index. That's because dealers are still working through their supply of pre-tariff cars, according to Ivan Drury, director of insights at Edmunds. With prices remaining in check so far, the Trump administration has declared victory. 'They've all been discredited,' said the White House's top trade adviser, Peter Navarro, in an interview last month with CNN, referring to tariffs' detractors. 'What we got in the first term [of Trump's presidency] was not recession or inflation, we got price stability, robust economic growth and rising wages, just as we thought we would.' Navarro has frequently pointed to the low overall inflation during Trump's first term, despite his tariffs. And he's right: CPI peaked at 2.9% in mid-2018 before falling below 2% throughout most of 2019. But Navarro's assertion about the impact of tariffs on the US economy comes with a couple of significant caveats: First, Trump during his current term has already placed tariffs of at least 10% on $2.3 trillion of imported goods, comprising 71% of all US goods imports, according to the nonpartisan Tax Foundation. In his first term, Trump placed tariffs on just $380 billion worth of foreign goods. And second, the pandemic severely disrupted the global economy soon after Trump's tariffs took effect, preventing economists from getting a decent picture of how significantly prices rose. But some data shows prices gained in the specific sectors Trump targeted with his first-term tariffs. For example, after imposing some steel tariffs in 2018, US production expanded modestly, but it sent costs rising for cars, tools and machines; and shrank those industries' output by more than $3 billion in 2021, the International Trade Commission found in a 2023 analysis. Nevertheless, Joseph Lavorgna, a former Wall Street economist turned Treasury Department official, took a victory lap because inflation hasn't risen since Trump imposed tariffs during his second term. 'Tariffs have just not shown up at all in any of the data,' Lavorgna, counselor to the Treasury secretary, told CNN this week. 'The forecasting community has been completely wrong.' Lavorgna, a former SMBC Nikko Securities chief economist who also served in the White House during Trump's first term, said a broad range of inflation metrics suggests foreign producers are absorbing tariffs and that the trade war won't be inflationary. White House press secretary Karoline Leavitt echoed that message Thursday during a briefing, saying: 'America is quickly returning to the successful formula of the first Trump administration: low inflation and rising wages.' Many mainstream economists argue that the low inflation of the spring represents a calm before the summer storm, when they expect prices to rise. 'It's a question of when, not if,' Stephanie Roth, chief economist at Wolfe Research, told CNN. Walmart, Target, Lululemon, Home Depot and Costco among others have said in recent weeks that they will raise some prices because of tariff pressures. Although some of the big box retailers said they would work to keep most prices low, they acknowledged that they operate low-margin businesses, and in the cases when American-made alternatives are unavailable or more expensive, they expect that they'll have to pass some of that additional cost to their customers. Consumers won't be alone in their struggles with tariffs in the coming months, said said Sid Malladi, CEO of Nuvo, a company that manages businesses' trade partnerships. Price hikes will weigh on businesses, too, many of whom will take on some of the hit to keep prices as low as possible for as long as possible. But that could mean difficult conversations in the boardroom later this year about potential layoffs and other cost cutting. 'This is early innings. No one wants to be first out of the gate,' said Malladi. 'You don't want to risk reputational damage to your brand, because raising prices in this environment might cause customers to turn away from you. Many may eat their margin for a few months.' 'It's hard to overstate the level of anxiety businesses have,' Malladi added. Small businesses, without the supply chain mastery of larger companies, have struggled in particular to afford higher tariff costs and have said they are reducing supply or raising prices. Many have complained that American alternatives for some foreign imports may be unavailable or are too expensive. 'While larger retailers may have the scale, capital and pricing power to absorb or strategically offset these pressures, small and mid-sized players remain significantly more vulnerable, with limited flexibility to manage rising input costs or supply disruptions,' Telsey said in TAG's latest Product Pricing Analysis report. Telsey noted that prices, when they eventually start to rise, won't all gain equally or across the board. Only select goods will start to gain in price to start, likely beginning in late August or September. 'Inventory is ordered typically anywhere from six months to one year in advance, and it is expected that the select pricing pieces will begin to show up in late summer,' she said. Fed Chair Powell on Wednesday agreed that the tipping point for broad consumer price increases could come this summer as inventories of pre-tariff warehoused goods dry up. 'We do expect to see more of that over the course of the summer,' Powell said. 'It takes some time for tariffs to work their way through the chain of distribution to the end consumer.' Normally, retailers hold about 1 to 2 months' worth of inventory on items, noted Kristy Akullian, head of iShares Investment Strategy, Americas, so prices could begin to rise in the coming weeks. Another indication that prices could start to spike: In April's Institute for Supply Management services report, prices paid by businesses increased the most since November 2022, and business inventories contracted. 'Low inventories make it harder for companies to keep prices steady, so going forward, we expect the inflation impacts from tariffs to become more apparent,' Akullian said. Powell agreed with that timeline, noting companies that report on their business sentiment to the Fed have said they expect to pass those tariff costs on down the supply chain. 'Many, many companies do expect to put all or — some of the effect of tariffs through to the next person in the chain, and ultimately, to the consumer,' Powell said. 'So we're beginning to see some effects. We expect to see more.' Despite initial success at maintaining low prices, Treasury's Lavorgna conceded inflation could begin to rise down the road because of tariffs. 'I'm not saying there can't be a tariff effect on the numbers at some point,' he said. See Full Web Article

Yahoo

9 hours ago

• Yahoo

A First-Time Buyer Was Shocked When Their Escrow Shot Up. Turns Out, A Fixed Rate Doesn't Protect You From Tax And Insurance Hikes

Benzinga and Yahoo Finance LLC may earn commission or revenue on some items through the links below. When a Reddit user and their husband bought a home in 2021, they felt confident with their $1,250 monthly mortgage payment. It was a fixed-rate loan, and they had budgeted carefully. But that confidence quickly turned to confusion when their payment jumped to $1,600. At first, the couple thought their private mortgage insurance had increased. 'We've been in contact with our lender and they said the only way to get off the PMI is to get a home appraisal above $331K,' the person wrote in the r/FirstTimeHomeBuyer subreddit recently. So, her husband paid $500 for an appraisal that did meet the target value. But the lender said it was invalid because the appraiser wasn't on their approved list. They were told they'd need to pay $650 for another appraisal through the lender's channels. Don't Miss: Maker of the $60,000 foldable home has 3 factory buildings, 600+ houses built, and big plans to solve housing — Peter Thiel turned $1,700 into $5 billion—now accredited investors are eyeing this software company with similar breakout potential. Learn how you can Redditors were quick to point out what was really going on. 'Your PMI does not go up. Only your escrow for insurance and taxes can go up,' one top commenter said. Another added, 'Interagency appraisal guidelines prohibit financial institutions from using appraisals ordered directly by the borrower.' The original poster later confirmed what many had suspected: 'I asked our mortgage lender to send our last few escrow reports and it was in fact our hazard insurance causing the increase, not our PMI like we originally thought.' The takeaway was this: even with a fixed interest rate, escrow payments can shift drastically because of tax reassessments and insurance hikes. 'Be prepared for your escrow—property taxes and insurance—to go up even if you got a 'fixed rate' mortgage,' the OP warned. Trending: , which provides access to a pool of short-term loans backed by residential real estate with just a $100 minimum. Many commenters shared similar stories. One person said their mortgage payment rose by $800 due to an insurance lapse and property tax increase. Others explained how taxes often spike after a property changes hands, since previous owners may have had exemptions or lower assessments. 'My homeowners insurance went from $1,400 to $2,800 over a three-year span,' one person said. 'I shopped and found insurance with the same coverage for $1,300 again, only to be told they wouldn't cover the house due to them feeling the roof was old. I was forced to spend $12,000 for a new roof in 30 days.'The good news is that there are options. Homeowners can shop around for better insurance rates, dispute property tax assessments, and ask lenders for a broker price opinion instead of a full appraisal to remove PMI. 'I requested the PMI to be removed and was given two options,' one person explained. 'I went with the BPO and it was only $140. Ten days later, my PMI was removed.' Others suggested reviewing escrow statements annually and proactively paying shortages to avoid ballooning payments. 'If you pay the $1200 shortfall, you will owe $100 more a month. If you don't pay it off all at once, you will owe $200 more a month because you're paying the shortfall plus the extra $100 monthly,' one commenter warned. As for the original poster, she ended the thread with a lesson for others: 'As much as some people like to act like home buying and everything involved is intuitive and common sense, it's really not. So I hope you all can learn from our boo boo.' Read Next: Maximize saving for your retirement and cut down on taxes: . This Jeff Bezos-backed startup will allow you to .This article A First-Time Buyer Was Shocked When Their Escrow Shot Up. Turns Out, A Fixed Rate Doesn't Protect You From Tax And Insurance Hikes originally appeared on Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data