Money Management

Mortgage giant Fannie Mae just lowered its forecast for mortgage rates. Find out what it could mean for home buyers this year. 

Every month, mortgage giant Fannie Mae releases a housing market forecast that contains the agency’s best predictions on mortgage rates, new home construction, existing home sales, and more.

In its recently released January forecast, the big news is that mortgage rate expectations have been revised downward. By a lot.

Fannie Mae now expects the average 30-year fixed-rate mortgage to have a 5.8% interest rate by the end of this year. This is a sharp downward revision from the 6.5% rate expectation in the December edition. Plus, Fannie Mae believes rates will keep moderating after that, with a 5.5% projection for the end of 2025.

There were some other positive revisions in the data as well, most of which are likely because of lower expected mortgage rates. For example, the expectation for housing starts (new home construction) in 2024 is now 8% greater than Fannie Mae forecast just a month ago. And the number of existing home sales are expected to rise by 3.1% compared with 2023 levels, while the previous forecast called for nearly flat year-over-year growth.

What this could mean for home buyers and owners

To put it mildly, this could be a big deal for people who want to buy homes. Let’s say you’re in the market for a home and your budget is $500,000. You plan to put 20% down, so you’ll need a $400,000 mortgage loan.

At the October 2023 peak, mortgage rates were averaging about 8%. A $400,000 mortgage would come with a payment of $2,935 per month for principal and interest (not including taxes and insurance).As of this writing (Jan. 19, 2024), 30-year mortgage rates have pulled back to an average of 6.75%. This would lower the payment on a $400,000 mortgage to $2,594. That’s already over $340 less per month than the peak, so the market has already seen some relief.With a 5.8% rate, the mortgage payment on a $400,000 loan would decline to $2,347. This could make a big difference in housing affordability for many prospective buyers.If rates continue to fall to 5.5% by the end of 2025, it would make the payment on a $400,000 mortgage decline to $2,271 per month.

It’s also worth noting that this could make mortgage refinancing an attractive option for those who bought homes in 2023. In fact, Fannie Mae’s forecast calls for refinancing volume to nearly double in 2024.

Nobody knows for sure

To be perfectly clear, these are just projections. No expert or agency — even a mortgage giant like Fannie Mae — knows for sure what is going to happen. At the start of 2022, when rates were just over 3%, no major experts were predicting rates to more than double that year. There are many factors that influence mortgage rates, and it’s impossible to know what’s going to happen.

Having said that, the relatively sharp decline in mortgage rates since the October 2023 peak and this new forecast are clear signs that rates might be thawing, and housing could continue to get more affordable.

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The best life insurance policy will provide adequate coverage at a cost you can easily afford. But add-ons may be a vital factor, too. Learn more. 

If you have dependents, life insurance can be a key part of your financial plan. But with all of the products available today, it’s difficult to choose a policy, let alone know where to start. Only about half of Americans have a life insurance policy, according to the latest available data from the Life Insurance Marketing and Research Association (LIMRA).

Here are three steps you need to take to pick a life insurance policy that works best for your needs.

1. Consider your coverage needs

The first thing you need to know is the timeline for coverage, whether that’s a limited amount of time or for the rest of your life. For instance, if you just want coverage to pay off your mortgage so your family will be able to stay in your home, a term policy that lasts until your mortgage is paid off makes sense. But if you have kids or just want to provide income for your spouse, permanent life insurance — like a whole or universal policy — could be the way to go.

Once you’ve figured out if you want a term or permanent policy, you can look into the coverage amount you require. In general, you want to consider the following:

Annual income (if you’re using the policy to replace it)Existing debts (including things like credit cards, mortgages, and student loans)Expected income (like spousal Social Security benefits)Inflation (which has averaged 2.5% per year over the last decade, based on Bureau of Labor Statistics data)Timeline (how long you want to replace various costs for)

2. Calculate your life insurance budget

Coverage needs are one thing, but depending on your income, you may have to make some adjustments based on how much you can afford to put toward a life policy per month. The worst-case scenario is that you become unable to make your premium payment and that causes your policy to lapse. That’s why it’s vital to get multiple quotes from different insurers to see your options.

For context, the cost of a life policy will depend on many factors, like:

Your ageGeneral healthGenderCoverages

Life insurers generally charge more for riskier policyholders. So you might have to adjust your coverage if, for example, you fall into a riskier category by being a smoker or being an older applicant. Or, if you can, making lifestyle changes can help you secure more affordable rates.

The cost can also determine the type of insurance you end up getting. For example, if you need a high amount of coverage, a term life policy is probably a better option for your budget since those premiums tend to be lower than you’d get with a comparable permanent policy. The fact that it would expire after the term is up may not be ideal, but having some sort of protection in place may be more important to you.

3. Understand your add-on requirements

Life insurance policies can be used to simply provide a death benefit — but nowadays, they have so many other potential benefits you can tap, depending on the type of policy you get. For example, permanent policies can build cash value, which can be borrowed against. The absence of certain add-ons may be a dealbreaker. So it’s important to know where you draw that line before getting a policy.

There are additional features that can come with these policies, too:

Long-term care benefits: You can use these during your lifetime to pay for certain long-term care costs, should you require that type of care. For context, 65-year-olds have a 70% chance of needing long-term care before they die.Conversion to permanent coverage: Some term life policies offer the option to convert it to a permanent policy without having to get a medical exam, which can be especially helpful if you’re trying to hedge against potential life changes that are harder to predict.Accidental death: This rider would provide additional coverage in the event that the death of the policyholder occurs because of an accident. This can total two to three times the value of the original death benefit.Disability income: If you become disabled after the policy waiting period, you’d be able to get disability income while you’re alive to help cover those costs and loss of income.

Add-ons like these can come at an extra cost, or they may be included in the base price. You need to examine the terms of those options as well, and take that into account.

Life insurance can be complex, but ultimately the best life insurance policy for you will provide all of the benefits and coverages you want, at a price you can afford.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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It could make sense to get a new bank this year. Read on to learn more. 

Some people do a lot of research before choosing a bank. Others simply pick a bank based on name recognition or convenience, such as selecting the bank that happens to have a branch down the block from where they live.

At some point, though, it could make sense to move from your current bank to a new one. So if you’re wondering whether you should make a bank change in 2024, ask yourself these key questions.

1. Are the interest rates my bank is offering competitive?

These days, savers have a prime opportunity to earn a nice amount of interest on their money. Following the Federal Reserve’s multiple interest rate hikes in 2022 and 2023, savings account and CD rates are now pretty generous.

Of course, things could start to change later this year if the Fed cuts rates, which it may do if inflation continues to cool. But for now, you can potentially earn a nice amount of interest in a CD or savings account.

So to that end, do some research and see how well your bank stacks up. If you find that many other banks are offering notably better interest rates, then it may be time for a switch.

2. Does my bank charge fees that other banks don’t?

Some banks impose fees for things like having too low a balance or making too many transactions. If your bank is one of them, you may want to find a bank that’s less fee-happy. You don’t want to keep losing money for no good reason.

One thing to keep in mind is that in recent years, a growing number of banks have decided to do away with overdraft fees. So if those are still a component of your checking account, you may want to make a change.

3. Is it easy to connect with customer service at my bank?

Reaching a customer service representative at your bank shouldn’t be a painful experience. You should not have to wait 30 minutes on hold listening to annoying music to speak to a live person, and you shouldn’t have to wait in an endless line every time you visit your closest branch.

If your bank is sorely lacking in the customer service department, that’s reason alone to consider a switch. You shouldn’t have to feel like the help you need is inaccessible.

4. Has my bank been involved in numerous security breaches?

Banks have long been a target for in-person and cyber criminals looking to make some quick cash. And unfortunately, hacking attempts are only increasing. JPMorgan Chase, in fact, says that it’s seen a notable increase in attempts to infiltrate its systems over the past year.

It’s crucial for banks to invest in physical and cyber security to keep your money safe. If you keep hearing reports that your bank has been involved in a security breach, you may want to consider making a move to a bank that’s investing more resources in preventing those things from happening.

You may be pretty happy with your bank, and if so, you don’t have to make a change. But if your bank is stingy in the interest department, charges high fees, has lousy customer service, and doesn’t have a good handle on information security, then it may be time to look at moving your money elsewhere.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Maurie Backman has positions in Target. The Motley Fool has positions in and recommends JPMorgan Chase and Target. The Motley Fool has a disclosure policy.

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This writer has certain items she stockpiles from Costco. Read on to see what they are. 

Some people shop at Costco on occasion, such as when they need a specific household item in bulk. I, however, shop at Costco every week, and it’s definitely become my go-to source for certain staples. Here are three essentials I always buy at Costco — and try to always make a point to keep around.

1. Tissues

Whether it’s allergies, a cold, or something else, it seems like someone in my house constantly has sniffling going on. I like to stock up on tissues at Costco because I’m not picky about what I wipe my nose with, and the Kirkland-brand tissues are usually competitively priced.

A 12-pack of Kirkland tissues with 84 tissues per box costs $19.99 online. That’s $0.02 per tissue. And I buy my tissues at my local Costco store, where they cost even less.

At Target, a six-pack of the store brand costs $9.49 online, but each box only contains 65 tissues. So the price there is closer to $0.03 per tissue.

That may not seem like a huge difference — we’re talking about less than $0.01 in savings per tissue. But when you use a few hundred tissues a week, it adds up.

2. Eggs

In my household, we go through a lot of eggs. First, we eat them for breakfast pretty often. Plus, I tend to do a lot of baking, and almost every recipe of mine needs at least one egg.

Buying eggs in bulk at Costco saves me a fair amount of money. The cost for same-day delivery in my area is $14.03 for 60 eggs, or $0.23 each. And because I shop at Costco in person, I pay a lot less. At my local supermarket, the cost is more like $0.27 per egg.

3. Granola bars

Between my kids’ busy after-school activities, sports schedules, and my generally hectic existence, I often find myself needing a snack on the go. Granola bars tend to fit that bill, so I make a point to stock up at Costco, where they’re less expensive than at other stores.

Kind bars happen to be a favorite of mine because they’re relatively low in sugar and high in protein compared to some of the other bars I’ve seen. A 20-count on Costco.com costs $23.99, or $1.20 per bar. At Target, a 12-pack is $15.19, or $1.27 per bar. But again, I pay the in-store price at Costco, which is cheaper than the online price.

Also, here’s a pro tip: It’s a good idea to keep a compact-but-filling snack like granola bars on you or in your car at all times. My stash of Kind bars has helped me avoid impulse buys at the supermarket by not being forced to shop while hungry.

How to save money on your personal Costco essentials

Your list of Costco essentials may look different than mine. But there are steps you can take to save even more on your Costco necessities.

First, look out for sales and stock up on non-perishables when Costco lowers prices on the items you use regularly. Next, see if there’s a Kirkland version of whatever it is you’re buying. Not being picky about the brand you bring home could leave you spending less.

Finally, consider an Executive membership upgrade. For an extra $60 annually, you’ll get 2% cash back on your Costco purchases. And if you spend $3,000 a year at Costco, the upgrade pays for itself. From there, you benefit financially by scoring more cash back than what the upgrade costs.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.Maurie Backman has positions in Target. The Motley Fool has positions in and recommends Costco Wholesale and Target. The Motley Fool has a disclosure policy.

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Money market accounts might not be on your radar. Keep reading to learn why an MMA might just be a good fit for you this year. 

If you want the convenience of a checking account and the higher APY of a savings account, have I got a deal for you!

Money market accounts (MMAs) offer the chance to earn a return comparable with today’s best high-yield savings accounts, and they also give you easier access to your money by way of a debit card or check-writing privileges (or both). These neat hybrid accounts aren’t discussed as often as other bank accounts, but they are absolutely worth considering in 2024 for one big reason — higher interest rates.

Here’s what you need to know about higher rates on MMAs, as well as a few points to consider when you decide whether this account is right for you.

APYs are still high — for now

Right now is a great time to have cash saved, thanks to the higher federal funds rate. It’s important to note that the Federal Reserve does not set consumer interest rates — the federal funds rate determines how much banks pay to lend each other money. But consumer interest rates are linked and tend to move in the same direction.

When we saw inflation spike in the wake of the COVID-19 pandemic, the Federal Reserve started raising rates — and ended up raising them 11 times between 2022 and 2023 to help bring inflation under control. Consequently, rates on savings accounts, certificates of deposit, and money market accounts spiked — while rates on loans and credit cards did too.

The move seems to have worked, and as 2024 proceeds, the Fed is expected to lower rates. This would likely lead to falling annual percentage yields (APYs) on bank accounts (bad for savers), and perhaps also lower APRs on loans (good for borrowers). As of this writing, the highest APY on our list of the best money market accounts is 5.30%, which is quite good. If you’re on the hunt for an account with more flexibility than either CDs or savings accounts, consider an MMA — and pay special attention to those offered by online banks specifically, as they’ll be less likely to come with pesky bank fees.

A few caveats for MMAs

It would be remiss of me not to mention a few potential deal breakers for money market accounts (and I strive to give you, the reader, all the information you need). You may need to have more savings to initially open an account than you might with a savings account — many savings accounts can be opened with $0. Similarly, you might need to maintain a higher balance to keep earning a high APY on the account.

Speaking of maintaining a high APY, once the Federal Reserve lowers rates, you’ll see the rate decline on your MMA. If you’d prefer to lock in a higher APY for a longer period, I recommend exploring CDs instead — it’s a great time to find a 1-year or 18-month CD with a high rate. Just be sure you won’t need your money during that time.

Like savings accounts, many MMAs still have monthly withdrawal limits that date back to old Regulation D rules (some banks stopped enforcing that six withdrawals per statement cycle during COVID-19). So if you’re hoping to dip into your cash often, this is something to be aware of. If you go over your transaction limit, you may face a fee or have your account converted to a checking account — losing that sweet APY in the process.

And finally, money market accounts are less common than savings accounts, so if you already have a banking relationship that you’d like to extend by adding an MMA, you may not be able to do that, depending on your bank. Luckily, The Ascent’s list of the best money market accounts can help you find a winner.

You may never have considered an MMA before, but one could be a good fit for your money this year. And now you’re better armed to decide.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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