Finance

The downward direction mortgage rates are taking indicates this is the time to buy a home or start refinancing mortgages. The downward direction mortgage rates are taking indicates this is the time to buy a home or start refinancing mortgages. The average rate for the 30-year fixed-rate mortgage dropped to 3.231% last week, showing a 0.015% decline in a single day. This rate drop is the first since mid-March.  Mortgage rates already decreased in 2020, and many homeowners seized the opportunity to refinance existing loans or get new ones. Others have bought homes thanks to the more affordable rates. In January 2021, the rates reached a record low for a short time before they rose back in February. More companies are thinking of using real estate CRM software to battle these sudden changes. As for the near future, experts predict a continued rise in mortgage rates. The ascent will not be drastic, though, nor will it happen quickly. Different factors such as the Covid-19 situation and economic relief packages could affect the rates. They should remain low through the first half of the year, with a slight rise in the second half. Even with the expected rate increase, this is a good moment to buy a home or refinance loans. With the 30-year fixed mortgage rate decreasing, you would currently pay principal and interest approximately $434.00 for every $100,000 borrowed. Property management software might be of great help here as well. The average 15-year mortgage rate is also dropping, hitting 2.473% last week. The principal and interest should be $665 for every $100,000 borrowed. On the other hand, the average 5/1 ARM rate was 2.893% on April 15, showing an increase of 0.025% compared to the day before.  Joel Kan, associate vice president at MBA, said that the refinance activity has decreased for nine of the past ten weeks. Total mortgage application volume decreased 3.7% last week.

By Milja April 21,2021

Coinbase made its debut on Nasdaq on Wednesday, closing the day with a market cap of around $62 billion. That makes it the seventh-largest new US listing, right behind Uber’s market cap of $69.9 billion. The success of Coinbase signals a bright future for the crypto market. It’s also worth noting that companies and individuals that rely on crypto mining are increasingly looking to remote desktop software. Coinbase is a start-up based in San Francisco that allows people to buy and sell cryptocurrencies. It’s the first crypto start-up to go public on the US stock market, with proponents of digital currencies describing this moment as proof of the industry’s strength. Coinbase started the day at $381 a share, which is significantly higher than the $250 reference price set by Nasdaq. It then shot up to $429 before dropping to a low of $310 and finally closing at $328.28. The listing offers a great avenue to invest in crypto for both young, tech-savvy investors who use tools like task management software as well as more traditional investors who had reservations about buying risky digital currencies. The success of this crypto exchange eclipsed giants like DoorDash, Kraft Foods, Palm, General Motors, and Visa. It even surpassed Goldman Sachs’ $31 billion listings in 1999. If Coinbase’s listing remained at $465, it would have surpassed Airbnb’s $86.5 billion listings. It goes without saying that such companies must have a foolproof online legal service. If Coinbase’s price of $328 per share endures, its market cap might increase to $83 billion. The company, which has 1700 employees and 56 million registered users, reported a net profit between $730 million and $800 million for the first three months of the year, bringing in $1.8 billion in revenue.

By Julija A. April 16,2021

G20 finance officials are set to back a $650 billion boost to the IMF’s emergency reserves along with a debt payment freeze as an attempt to help developing countries deal with the consequences of the COVID-19 pandemic. The virtual meeting was also marked by the US’s initiative to agree on a minimum global corporation tax rate. G20 finance ministers and bank governors have concurred that they should reach an accord for a global minimum corporate tax rate by the middle of 2021. The Biden administration’s global tax minimum received support from Germany, Japan, and France, which could speed up this monumental agreement. Aside from these countries, the European Commission also supported the proposal, which would finally see IT corporations contributing their honest share. “I’m in high spirits that with this corporate taxation initiative, we’ll manage to put an end to the worldwide race to the bottom in taxation,” said Olaf Scholz, Germany’s minister of finance. The tax rate is also to be negotiated among a group of around 140 countries to reach an agreement which is meant to  disincentivize multinational companies from relocating their profits to tax havens. The IMF’s positive forecast of 6% global growth was reflected by many countries’ economies rebounding from the effects of COVID-19. However, experts warn that the pandemic is jeopardizing current efforts to deal with poverty. “We have no way to get through without pulling together,” said Kristalina Georgieva, IMF Managing Director, reiterating that richer countries need to help less fortunate countries with vaccination efforts. According to economists and experts, expanding the IMF’s emergency reserves should help with liquidity for all member countries without adding to existing debts for countries at risk of a debt crisis. Some of the other issues addressed at the meeting related to protectionism in world trade and efforts to deal with climate change.

By Dusan Vasic April 15,2021

After getting stuck in the Suez Canal on Tuesday and holding up approximately $9 billion in goods per day, the cargo ship Ever Given has finally been partially refloated. This will soon allow the 367 ships stranded by the blockage to continue on their journeys. The Ever Given, a 1,400-foot long ship, got jammed diagonally across the Suez Canal on Tuesday, reportedly due to a strong windstorm that caused low visibility. Efforts to move the gigantic ship began soon after, with a total of 14 tugboats working on getting it afloat. After these efforts appeared unsuccessful, the Egyptian government proposed offloading some of the ship’s 18,300 containers, which would have added a couple of weeks to the process. "If it goes more than five days, then we start to see our schedule back up. I'm sure other ships are on a much tighter schedule than we were... It's going to affect shipping schedules all around the world," Joe Reynolds, chief engineer at Maersk Ohio, told the BBC in an interview on Saturday. Luckily, even though efforts to move the ship had seemed futile for several days, Inchcape, a maritime service provider, has reported today that the ship has been successfully re-floated and is secured at the moment. The Suez Canal Authority said the efforts have successfully moved the ship 334 feet away from the shore and toward the middle of the waterway. The overall damage is yet to be definitively calculated. However, it’s estimated that each day is costing more than $9 billion due to goods being stuck in containers in the canal, which amounts to approximately $400 million an hour. An investigation into how the incident happened is also underway. Some preliminary results suggest that faulty equipment or human error could be to blame, instead of a windstorm, as was first thought. With about 12% of global trade heading through the Suez Canal, representing the shortest sea link between Asia and Europe, the stranded ship has caused a catastrophic blockage in maritime transport. With the canal blocked, the only alternative route for 367 ships currently waiting for the canal to open is going around the Cape of Good Hope, which would add an additional two weeks to the journey and increase the cost of both fuel and time for such a trip. However, the Ever Given’s sister ship, the Ever Greet, was one of the first ships to reroute. The jam may yet force ships to change their route to travel around Africa, which not only makes the journey significantly longer and costlier, but also increases ships’ exposure to potential pirate attacks. While many say that the pirate threat along the coast of Somalia has been blown out of proportion and is now under control, it’s still a route many would prefer not to take. Of course, while almost everyone will welcome the canal’s reopening, the stranded ship has already become an internet sensation, with games and memes exploding on social media networks. It’s safe to say that solving this blockage, especially with the disruption brought on by COVID-19 restrictions and the rise in shipping rates for oil product tankers, is of paramount importance for returning global supply chains to something approaching normal.

By Julija A. March 29,2021

Fraudsters are exploiting the COVID-19 pandemic and have stolen billions in unemployment benefits, according to a computer security firm. ID.me is a company that verifies the identities of approximately 75% of the workforce in 19 states. It reports that $200 billion worth of federal assistance for unemployment benefits during the pandemic may have been fraudulent. Based on data relating to fraud rates before the pandemic, the official government estimate of $63 billion is three times smaller than ID.me’s estimate. Criminals commit fraud by stealing people’s personal data in 20% of cases. The other most common types of fraud are committed through social engineering (10%) and face matching (2.5%), where criminals attempt to use an image, video, or “mask” of their victim. ID.me says at least 30% of claims to the Pandemic Unemployment Assistance program, which the Federal Government unrolled to assist self-employed Americans, have been fraudulent. After the Paycheck Protection Program, unemployment benefits, and stimulus checks, fraud relating to unemployment benefits is the fourth “largest spending program,” according to the American Enterprise Institute. The federal government has spent $557 billion in total on unemployment benefits, and as much as 36% of that could be the result of fraudulent claims. Even the original government estimate of $63 billion and the 10% error rate surpasses the funds allocated to food stamps or vaccine and treatment development. The states with the highest unemployment benefits - California, Washington, and Massachusetts - are the primary targets for fraud. According to government officials, out of $11.4 billion in unemployment benefits paid in California during the pandemic, 10% has involved fraud, while another 17% is under investigation. Washington state has identified 122,000 suspected and fraudulent claims for unemployment benefits, amounting to $600 million, according to a report filed by the Office of the Washington State Auditor. The Massachusetts Department of Unemployment Assistance has reported that $687 million in claims have been fraudulent. The American Rescue Plan was recently passed by congress, allocating $209 billion to unemployment out of the total $1.8 trillion. A further $94.3 billion was allocated to expanding eligibility for COVID-19 support payments. Currently, 18.2 million Americans are collecting unemployment aid, while 770,000 applied for assistance the first time in March this year.

By Julija A. March 26,2021

The COVID-19 pandemic has created severe congestion in the shipping industry, with dozens of cargo ships anchored just off the coast of California unable to offload their cargo. The pandemic disrupted the global supply chain at the start of 2020. As a result, factories were closed across China, meaning they weren’t able to deliver goods to the American market. At the same time, strict lockdowns changed shopping habits drastically. Demand for home fitness equipment, consumer electronics, and home improvement gear increased orders from US companies to Asian factories, creating congestion in ports and freight transport centers. More than 40 freighters were forced to wait their turn to dock into the LA and Long Beach ports in January. The problem has continued to this day and shows no signs of subsiding. Because of these delays, businesses have had to wait months to receive goods from China instead of weeks, as was the case before the pandemic. “With this type of backlog, it will take several weeks to work through that. It doesn’t go away. And new ships are sailing to the US even as we speak,” Shanton Wilcox from PA Consulting said. According to Kip Louttit, executive director of the Marine Exchange of Southern California, the problem extends to dry land. That’s because more than 8,000 trucks are required to unload a single freight ship. “When you have more cargo, you have a less efficient cargo moving system. The pandemic itself is also slowing down the flow of goods, sidelining workers in warehouses at the ports,” Louttit said. This supply distribution bottleneck is more disruptive for smaller businesses that can’t afford air freight. Larger companies that can move their production away from China have been less likely to feel the effects. Supply chain impediments also have an effect on exports, as unloaded containers are sent without being filled with US goods. Delays in container scheduling result in manufacturers having to wait between four and six weeks before loading their goods onto the ship.

By Julija A. March 26,2021

Mortgage rates have continued to climb for the fifth week in a row, resulting in a nine-month high. The latest data released by Freddie Mac on the 18th of March shows that the average 30-year fixed-rate mortgage has jumped to 3.09%, the highest it has been since June of 2020. The 15-year fixed-rate mortgage followed suit at 2.40%. The 30-year rate was at 3.05% the week before, and it started 2021 at 2.65%. The 15-year rate started the year at 2.16% and was at 2.38% the week earlier. "As expected, mortgage rates continued to inch up but are still hovering around 3%, keeping interested buyers in the market," according to Sam Khater, a chief economist at Freddie Mac. While the rates for mortgages and refinancing have increased, they are still at historic lows. This has resulted in fixed-rate mortgages offering better value than adjustable-rate mortgages, which may see further increases as the economy recovers from the effects of the COVID-19 pandemic. Experts expect rates to rise throughout the year due to the expected economic recovery and stabilizing actions taken by the Federal Reserve Even though the Federal Reserve doesn’t adjust mortgage rates, the policies it enacts may influence them. The Federal Reserve has been buying bonds during the pandemic, and it has consistently spent $120 billion per month, which has had a stabilizing impact on mortgage rates. "Economic signs are pointing toward a post-pandemic return to normality, a welcome development as spring approaches. While we expect rates to remain favorable, especially in light of historical trends, the upward move is capping many buyers' budgets and trimming their ability to qualify for more expensive homes," George Ratiu, senior economist at Move, Inc, said. With record-low interest rates, 2020 saw a significant increase in mortgages and refinancing. Mortgages in the US amounted to $4.3 trillion, with $2.8 trillion consisting of refinancing. This is an all-time record according to a report from Black Knight, a mortgage monitoring company. However, between February and March, the number of homeowners for whom refinancing would be a sensible option fell from 18 million to 12.9 million.

By Julija A. March 25,2021

Highly anticipated changes to Paycheck Protection Program rules set in motion earlier in March and designed to deliver generous relief to the most vulnerable small businesses might be coming too late.With the program set to expire in just a few weeks, lenders say they don’t have enough time to adapt to the changes. As such, newly eligible loan-seekers are having difficulty finding lenders willing to accept applications before the deadline.Under the program’s previous rules, unprofitable businesses weren’t eligible for loans. But the new formula introduced by the Biden administration allows sole proprietors to get loans based on their income before expenses while expanding eligibility to include minority-owned, veteran-owned, and women-owned businesses. This opens the door to small businesses, self-employed people, and non-profit organizations devastated by the coronavirus pandemic.However, the move comes dreadfully close to the March deadline. Major lenders that already have a severe backlog of applications, including JPMorgan Chase and Bank of America, refused to adapt to the changes. The latter has stopped accepting new applications altogether.Bill Halldin, a Bank of America spokesman, justified this by pointing to more than 30.000 applications that need to be processed before the deadline.Meanwhile, the policy changes are only fueling confusion among borrowers who were initially advised by lenders to submit their applications after the new, more lenient standards were set in place.Those who applied as soon as the White House made the overhaul announcement are now either being approved under old requirements or asked to repeat the application process. There is also no route for those already approved to apply again under better terms.Considering that there is still $119 billion left out of $284 billion authorized for the program, both lenders and borrowers are calling for an extension with admirable tenacity. The Biden administration hasn't asked for an extension yet, but key congressional leaders are open to the idea. The P.P.P. status will come under the spotlight during an upcoming hearing at the House Small Business Committee.In the meantime, small businesses across America are hoping for an extended deadline to get much-needed funds to keep their businesses alive during this unprecedented crisis.

By Goran March 16,2021

The House legislation passed Saturday narrowed the income eligibility for $1,400 stimulus checks. If the changes make it into the final bill, fewer Americans will see the stimulus payments. The newly-set thresholds would leave millions of families without this round of financial relief, the Penn Wharton Budget Model estimates. The decision has come as a result of a compromise between president Joe Biden and moderate democrats, who suggested tightening the income eligibility for the third round of stimulus checks. Most of the Republican members of Congress are against Biden’s relief plan. Even though they recognize the importance these payments have for the recovery of the US economy, they disagree on the eligibility requirements. Biden’s initial proposal was to set the cap at $100,000 for individuals, $150,000 for single parents, and $200,000 for couples. Voicing Republicans’ and some moderate Democrats’ concerns, this new legislation is supposed to make the final bill lower while setting the income thresholds higher.  The proposal suggests lowering income caps to $80,000 for individuals, $120,00 for single parents, and $160,000 for married couples. It is a modest 5% change, as stated by Howard Gleckman, senior fellow at the Urban-Brookings Tax Policy Center, with roughly 12 million adults still without the relief payments. The economy is looking anemic, and the new stimulus package would be more than welcome. However, some seven million upper-middle-class families do not meet the new eligibility requirements and those that do will receive smaller sums, based on the quicker phase-out rate. Those who criticize the proposed legislation suggested that cutting down the $1.9 trillion relief package could have been done differently, by reducing the volume of local and state aid.  Some are skeptical, saying that the Democrats’ proposal was far from a relief effort and that the citizens’ cry for help in these unprecedented times should be addressed more vigorously. Among them, Congresswoman Alexandria Ocasio-Cortez tweeted on Wednesday that working people need “more generous relief checks, $15 min wage, ending the filibuster to protect our democracy”. Some also argue that the phase-out rates are exceedingly steep, resulting in worse low-income households’ situations.  The bill is about to move forward this week. Democrats would need the support of the whole caucus, given the fact that the party has only fifty votes in the Senate and uncertain GOP support.

By Goran March 16,2021

The multinational corporation, Costco Wholesale, is planning on increasing its minimum wage in the United States to $16 per hour. Costco’s long history stretches back to 1976 when Sol Price opened the world’s first membership warehouse club – Price Club. Several years later, Price Club’s executive vice-president of merchandising, Jim Sinegal, co-founded Costco Wholesale with Jeff Brotman. In 1983, the two enterprises merged and became the company we know today. On February 25, 2021, during a US Senate Budget Committee hearing, Craig Jelinek - Costco’s president and CEO - announced that the retailer would boost its workers’ minimum wages to $16. Jelinek also stated that more than half of the company’s 180,000 US employees earn upwards of $25 per hour and that the average Costco employee earns around $24/hour. According to The Wall Street Journal, the retail chain raised its starting rate from $13 to $14 per hour in 2018, adding another dollar less than a year later. Costco’s latest increase puts it ahead of its competitors such as Amazon and Target, whose minimum hourly wages are still $15 per hour. Despite all these positive changes in the retail industry, the world’s largest company by revenue, Walmart, persists in maintaining its payments at $11/hour. President Biden’s $15-minimum-wage proposal offered some hope in these troubled times, as it was supposed to be included in the $1.9 trillion COVID-relief stimulus package. However, the suggested increase recently suffered a significant setback due to an unfavorable ruling by a Senate official, so the future of America’s workers remains uncertain. For now, Senate Democrats are looking into alternative methods of providing the wage increase: The options include tax credits for small businesses if they pay their employees higher hourly compensations or penalties for large corporations that avoid providing their staff with the specified sum. At the moment, the federal minimum wage is $7.25 per hour - a woefully inadequate amount in the 21st century due to the steady climb of living costs. Fortunately, many states have adopted their own minimum-wage laws, of which some more than double the federal amount. In his address to the Senate Budget Committee, Jelinek also said: “I want to note: this isn’t altruism. At Costco, we know that paying employees good wages and providing affordable benefits makes sense for our business and constitutes a significant competitive advantage for us. It helps us in the long run by minimizing turnover and maximizing employee productivity, commitment, and loyalty." Jelinek didn’t specify whether Costco supports the minimum wage hike, but when asked if he would support a bill that mandates a federal minimum wage of $11 per hour, he responded with: “11 dollars? It’s better than $7.25.”

By Julija A. March 03,2021

Mortgage rates are steadily climbing for a sixth consecutive week, prompting buyers to steer clear of the market. The latest data shows an increase to 2.98% for a 30-year fixed-rate mortgage offer. According to the Mortgage Bankers Association, the demand for mortgages fell, with total application volume decreasing by 5.1% the same week. Joel Kan, MBA’s associate vice president of economic and industry forecasting, stated that the rates had been climbing ever since hitting the survey’s lowest point in December last year. Last week, the rates reached their highest level since November 2020, according to MBA’s weekly survey, which the organization started more than 30 years ago. When comparing these figures to the ones from last year, the rates are still 0.79% lower than in February 2020. Mortgage refinancing experienced a 5% drop in the past week but is 51% higher than it was the year before. Mortgage applications to purchase a home fell 6% in the past week, following the trend over the past six weeks. Yearly, it is still 17% higher than the total mortgage applications for purchasing a home the previous year. However, while the spike heavily influences refinancing mortgage rates, the overall surge in mortgage interest is attributed to a record low inventory of homes available. The total number of homes available for sale is lower by nearly 43% compared to the year before. The most significant shortage is in the availability of lower-end homes, impacted heavily by the seller’s overall unwillingness to go through the trouble of putting their home on the market due to the coronavirus pandemic. As such, homes available on the market are not only scarce but also cost more. The average loan size for purchasing a home hit $412,200, another survey high. This is the result of both the inaccessibility of lower-end homes and a shift in the way people buy houses. A new survey by the National Association of Home Builders suggests that over 40% of buyers were outbid for their desired property. Joel Kan also stated that “purchase applications cooled the first week of February, but homebuyers are still very active.” In other words, despite the rising rates, homes are now sold ten days faster on average. 

By Julija A. February 18,2021

Robinhood Markets, operator of the trading platform at the center of the GameStop stock market storm, has lifted trading restrictions on all stocks, including GME and AMC. This move comes eight days after the company’s controversial decision to block purchases of GameStop, AMC, and other stocks. That action led to an enormous backlash in online communities and a review-bombing campaign that saw Robinhood drop to a one-star rating on many platforms. Google alone deleted more than 100,000 negative reviews to salvage the trading platform’s rating. Other consequences weren’t so easily reversed. At the height of the trading frenzy, Robinhood had to draw on bank credit lines to secure enough cash to clear trades. The trading block led to a huge drop in GameStop stock prices because potential buyers could not execute trades on the Robinhood website. Only a day after the January 29 decision to block GameStop trading, Robinhood announced it would resume trading the stocks in a limited capacity. This came after a $1 billion cash infusion from investors looking to safeguard traders.On February 4, Robinhood announced that it would remove volume restrictions on all stock trades. GameStop stock prices, which dropped during the trading blackout, began rising again. It remains to be seen whether Robinhood will manage to restore its tarnished reputation. While the GameStop debacle was the worst PR disaster the popular trading platform has faced, it isn’t the first time Robinhood has faced criticism. In December 2020, the platform came under scrutiny from securities regulators. Investigators felt Robinhood was guilty of gamifying investing because the website and mobile app made investing similar to a video game, which lured users and made them lose sight of the actual risks involved. Those investigations came after Robinhood paid a $65 million settlement for misleading customers about its revenue sources. Whatever Robinhood’s fate may be, questions that arose during the GameStop crisis will remain - especially questions about how free the market is, the long odds facing retail investors, and whether big players are illegally manipulating the market.

By Damjan Jugovic Spajic February 05,2021