interest rates – Sendika12 http://sendika12.org/ Fri, 18 Mar 2022 21:20:56 +0000 en-US hourly 1 https://wordpress.org/?v=5.9.3 https://sendika12.org/wp-content/uploads/2021/10/profile-120x120.png interest rates – Sendika12 http://sendika12.org/ 32 32 Bank Of Hawaii Stock: Poised To Benefit From Higher Interest Rates (NYSE: BOH) https://sendika12.org/bank-of-hawaii-stock-poised-to-benefit-from-higher-interest-rates-nyse-boh/ Fri, 18 Mar 2022 20:49:34 +0000 https://sendika12.org/bank-of-hawaii-stock-poised-to-benefit-from-higher-interest-rates-nyse-boh/ Art Bet / E+ via Getty Images As recently covered First Hawaiian (FHB), Bank of Hawaii (NYSE: BOH) stocks have been fairly flat since the last coverage. The valuation didn’t really look convincing at the time, and with the post-COVID recovery also looking a bit lackluster, I guess a quiet period here shouldn’t be so […]]]>

Art Bet / E+ via Getty Images

As recently covered First Hawaiian (FHB), Bank of Hawaii (NYSE: BOH) stocks have been fairly flat since the last coverage. The valuation didn’t really look convincing at the time, and with the post-COVID recovery also looking a bit lackluster, I guess a quiet period here shouldn’t be so surprising.

Graphic
Data by YCharts

Although the bank’s operating performance has been a bit sluggish, we are seeing at least some growth in core lending, and interest rate hikes have also been very much in evidence since the start of this week. This should serve the bank well as we move forward into 2022, although I was a bit concerned that increasingly pessimistic economic growth forecasts would put a damper on this part of the story.

These stocks still don’t look cheap on common bank valuation metrics like normalized PE and P/TBV, but again, they rarely do. While I wouldn’t rule out the quiet period here continuing in the short term, and there are other headwinds to consider, “more of the same” can work very well in the long term, with return to mid-single-digit core earnings growth and a dividend yield of 3.35% sufficient to generate acceptable returns for dividend investors.

Results still a little pedestrian

The reported numbers continue to look a little weak, with revenue nearly flat sequentially at $168.9 million in the fourth quarter. Within this, net interest income (“NII”) decreased by a shade sequentially on a reported basis, primarily due to lower interest income from the Paycheck Protection Program as these loans continue to decline in the balance sheet.

Bank of Hawaii quarterly net interest income

Bank of Hawaii Quarterly Net Interest Income (Bank of Hawaii Quarterly Earnings Release)

Non-interest expense also increased, rising more than 5% sequentially and 3% year-on-year to $101.7 million in the fourth quarter, driving the efficiency ratio above 60% for the quarter.

With revenue still sluggish and expenses rising, quarterly operating income before provision (“PPOP”) was also predictable, falling 6% sequentially to $67.3 million. And that was pretty much the story for 2021 as a whole – rather weak income, due to a combination of low interest rates and sluggish non-interest income, facing spending higher operating. Unsurprisingly, PPPP for the full year was also low, as expected, at $275 million versus $306.9 million in 2020.

Bank of Hawaii quarterly operating profit before provision

Bank of Hawaii PPPO (Bank of Hawaii quarterly earnings release, author’s calculations)

The provisioning, however, continued to be a boon to net income, with the releases contributing $9.7 million to pretax profit in the fourth quarter and $50.5 million for the whole of year. This contributed to annual EPS of $6.25, compared to $3.86 in 2020.

Ongoing core loan growth

Although the numbers released by the bank make the recovery here a little slow, we are at least seeing signs of underlying growth. Core loans (i.e. excluding PPP balances) rose again for one, rising 2.8% sequentially and 6.2% year-on-year in the fourth quarter to 12.1 billion. dollars. It was also the third consecutive quarter of accelerating core loan growth – with core loans posting sequential growth of 2.4% and 1% in Q3 and Q2 respectively.

This resulted in a slight increase in the “base” NII (i.e. excluding PPP interest income and certain one-time charges), which increased 2.2% sequentially to $121.5 million in the fourth trimester. With PPP loan balances down to just $126.8 million at the end of last year (about 1% of total end-of-period loans), this run-off should present only a modest headwind. in 2022.

The economic recovery is fairly well established at this point, having experienced a slight wobble due to the impact of the Omicron wave on the state’s tourism economy. COVID restrictions are easing to the point of non-existence for domestic visitors, while the resumption of international travel is expected to accelerate later in the year. The state’s housing market also continues to look very strong. All told, I expect core loan growth (and subsequent NII growth) to show through in the results released this year.

Ready to benefit from higher interest rates

Loan growth should be a boon for the NII this year, but the bank will also see an increase in interest rates now that the tightening has really begun. Fixed rate loans make up a large part of the mix here (around 65%), but the bank has a very sticky deposit base which will give it the ability to capture higher margins. Moreover, a current loan-to-deposit ratio of 60% combined with the ongoing maturing of loans/investment securities suggests that it will have no problem recycling capital into higher-yielding assets.

The bank’s standard sensitivity disclosure indicates an immediate 100 basis point hike in rates, resulting in an annual rise of about 7.9% in the NII, with a more gradual change of the same magnitude resulting in an increase of 3. 1% of the NII.

Perspectives

While I expect to see tangible improvement in the NII based on a combination of loan growth and higher interest rates, there are some headwinds to consider, at least in the short term.

First, and like many banks, management expects a significant increase in annual operating expenses this year – somewhere in the 6% zone, as inflation ripples through wage growth and bank invests in technology. The latter should at least support future growth, but in the short term it will weigh somewhat on the PPPP and net profits.

Second, supply obviously won’t provide the same pop to the bottom line as last year. The bank’s allowance for credit losses is still about 30 basis points above immediate pre-COVID levels (1.29% vs. a “day 1” ACL of 0.99%), so there is room to maintain small impairment charges in the future, but vis-à-vis 2021 this line will obviously be a drag on net income and EPS this year.

Still a good choice for dividend investors

The immediate term might continue to be a little disappointing in terms of revenue, but that’s not something I see continuing in the medium term. On the one hand, the bank has always been very strong in terms of expense control, registering a CAGR of around 3% in the five years before COVID. Growth in operating expenses should moderate in 2023, returning to its historical trend thereafter. A corporate tax hike also seems out of place – something I was a bit cautious about last time.

With that, I expect annualized growth in the dividend per share of at least 5-6% over the next five years, consisting of the following:

  • Mid-single-digit annualized revenue growth, driven by mid-single-digit annualized loan growth, higher interest rates and modest non-interest revenue growth.
  • Operating expenses are expected to increase 6% in FY22, slow to 4% in FY23 and return to more moderate historical growth levels thereafter.
  • The above will lead to single-digit annualized PPOP growth – broadly in line with pre-COVID trends – with lower net income and EPS growth due to the normalization of provision levels from FY22, offset to a small extent by the cumulative effect of share buybacks (in the case of EPS).
  • The above will lead to EPS of around $7.40 by 2026, with a dividend payout ratio of around 50% – broadly in line with its historical level.

While not the most exciting outlook in the world, the above works out pretty well for income investors given the current yield of 3.35%. To buy.

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As the Fed begins raising interest rates, Americans should brace for pain https://sendika12.org/as-the-fed-begins-raising-interest-rates-americans-should-brace-for-pain/ Wed, 16 Mar 2022 00:39:13 +0000 https://sendika12.org/as-the-fed-begins-raising-interest-rates-americans-should-brace-for-pain/ Get the coronavirus nextThe next phase of our pandemic newsletter keeping you up to date with the latest developments as we enter a new normal. The Fed aims to lower inflation by reduce consumer spending and business owners who will find it more expensive to borrow. “The impact of a quarter-point hike is inconsequential, but […]]]>

The Fed aims to lower inflation by reduce consumer spending and business owners who will find it more expensive to borrow.

“The impact of a quarter-point hike is inconsequential, but the cumulative effect of six to ten interest rate hikes is a whole other ball game,” said Greg McBride, financial analyst in head of the financial information site Bankrate.com.

The consumer price index jumped 7.9% in February from a year earlier, the highest rate since 1982, after a spike in oil prices triggered by the invasion of Ukraine by Russia added to already rapidly rising prices caused by pandemic supply chain disruptions, pent up demand and government spending. High inflation is hitting American families and businesses hard, threatening the strong economic recovery from the pandemic.

Inflation is also a major political issue for President Biden, who said in his State of the Union address that “my top priority is to get prices under control.” Half of respondents in a Wall Street Journal poll released on Friday ranked inflation as the most important thing the president and Congress should tackle, double the second place of the war in Ukraine. And 63% of voters registered in the poll said they disapproved of Biden’s handling of inflation.

So there’s a lot at stake economically and politically as the Fed, the federal government’s main inflation fighter, takes its first step in what is going to be a months-long effort to try to rein in soaring oil prices. gas, groceries, cars, rent and other consumer expenses.

The Fed’s task is extremely difficult as it must determine how much to raise rates without slowing the economy to the point of falling into recession. The effort is inherent in the pain of average Americans, whom the Fed is trying to discourage from spending, said Kathy Bostjancic, chief U.S. financial economist at Oxford Economics, a global forecasting and analysis firm.

“You don’t want it to be a killer blow, but you definitely want it to pinch consumer spending,” she said of the interest rate hikes. “To slow it down, not turn it off completely.”

When the pandemic hit two years ago, the central bank cut its key federal funds rate to near zero to spur spending. This rate applies directly only to short-term loans between banks. But banks use it as a benchmark for personal and business loans, and it also affects longer-term loans, like mortgages.

In anticipation of Wednesday’s Fed hike, mortgage rates have already risen. The average 30-year fixed-rate loan was 4.42% on Tuesday, up more than 1 percentage point since the start of the year to the highest level since 2019, according to Mortgage News Daily.

Credit card interest rates will adjust within a billing statement or two of the Fed’s rate hike, McBride said. In the past, banks have also increased the interest rate they pay customers on their deposits. But the big banks are teeming with deposits and are unlikely to raise those rates much, if at all, he said. Federally insured online banks, which are more eager for customers, are a better bet to raise their interest rates on savings and checking accounts.

Stock prices are likely to fall because higher interest rates increase borrowing costs for businesses and make stocks a less attractive investment. Major equity indices have already fallen significantly in anticipation of Fed rate hikes, as well as in reaction to the war in Ukraine. McBride said investors should ride out the volatility and avoid panicking as stocks typically rise over the longer term.

“We have already seen this film. After the dotcom meltdown, after the Great Recession and even just after the onset of the pandemic, markets fell by a third in early 2020 and have since rallied and hit new highs after new highs,” did he declare. “Don’t try to guess the market. Play the long game.

Treasury yields have also risen in anticipation of Fed rate hikes, and that’s a problem for the federal government as it must continue to fund its $30 trillion national debt.

Last July, when many economists thought high inflation would only last a few months, the Congressional Budget Office predicted the US government would pay $306 billion in debt interest this year. But that forecast was based on the Fed not raising interest rates until the middle of 2023.

If interest rates rise just 1 percentage point higher than projected over the next decade, Congress will have to find an additional $187 billion a year to pay the extra interest on the debt, according to an analysis by the Committee for a Responsible Federal Budget, a budget watchdog group.

Jason Furman, a Harvard economist who served as chairman of the White House Council of Economic Advisers during the Obama administration, said inflation wasn’t so bad when it came to the national debt. This could help ease the burden over time by reducing the amount of debt relative to the size of the economy.

Overall, Furman said he’s not concerned that gradual interest rate hikes will significantly disrupt the economy or the United States’ ability to service debt. He noted that the Congressional Budget Office expects the main Fed to 2.6% by 2031, which is still historically low.

“The era of super low interest rates is coming to an end, but we could be in the era of super low interest rates for a while,” Furman said.

But after the federal government doled out trillions of dollars in pandemic aid on top of its massive debt, any hike in interest rates could make it harder for Congress and the White House to fund national priorities and respond. to future emergencies.

“The Great Recession and the pandemic were absolutely times we should have borrowed. It was the right thing to do,” said Maya MacGuineas, chair of the Committee for a Responsible Federal Budget. But the federal government continued to run large budget deficits when the economy was relatively strong between these two efforts.

Now the inflated interest payments on the national debt will prevent Congress and the White House from providing fiscal stimulus if the Fed’s inflation-fighting efforts push the economy to the brink of recession, MacGuineas said.

“There was a kind of senseless naivety about people who were saying in recent years, ‘Don’t worry, we can borrow because interest rates will never go up,'” she said. “Never is a long time. And now, never is here.


Jim Puzzanghera can be contacted at jim.puzzanghera@globe.com. Follow him on Twitter: @JimPuzzanghera.

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Credit bureau backs capping loan interest rates https://sendika12.org/credit-bureau-backs-capping-loan-interest-rates/ Mon, 14 Mar 2022 12:00:13 +0000 https://sendika12.org/credit-bureau-backs-capping-loan-interest-rates/ THE Credit Information Corp. (CIC) announced its support for the introduction of a cap on interest rates and other fees for specific loans offered by loan companies (LCs), finance companies (FCs) and their payment platforms. online loan (OLP). CIC said in a statement on Monday that the cap on interest rates and […]]]>


THE Credit Information Corp. (CIC) announced its support for the introduction of a cap on interest rates and other fees for specific loans offered by loan companies (LCs), finance companies (FCs) and their payment platforms. online loan (OLP).

CIC said in a statement on Monday that the cap on interest rates and other charges will protect the welfare of borrowers against unsustainable interest rates resulting from excessive hedging and risk provisioning during the pandemic.

CIC President and CEO Ben Joshua A. Baltazar also said the cap on interest rates and fees should also improve access to credit.

“For now, putting a cap on interest rates and other fees for these low-value loans will help borrowers manage their repayment schedule and maintain a healthy credit history during this critical time. economic recovery,” Baltazar said. “In the meantime, continued improvements to the CIC database will provide lenders with better information for their credit ‘decision’ and risk management activities, leading to lower overall cost of credit. »

Baltazar, who is also a lawyer, added that capping interest rates and fees, especially for loan companies, finance companies and their PLOs, will also help break the negative stigma surrounding credit.

“One of our goals at CIC is to educate the public about credit as an important financial tool,” Baltazar said. “Specifically, we aim to correct the stigma associated with credit that is synonymous with financial hardship, mismanagement and vulnerability, which should not be the case.”

The Bangko Sentral ng Pilipinas (BSP) originally issued prescribed caps on interest rates and other charges for specific loans offered by LCs, CFs and PLOs, through its Circular Memorandum 1133 (2021 series ).

Loans covered by the caps are general purpose unsecured loans that do not exceed the amount of P10,000 and the loan term of up to four months.

Additionally, earlier this month, the Securities and Exchange Commission issued Circular Memorandum 03 (2022 series) implementing the central bank’s prescribed interest rate cap on LCs, CFs and PLOs. .

According to the 2019 Financial Inclusion Survey published by BSP, of the 33% of adults with outstanding loans, half applied for loans from informal sources such as informal lenders (54%) and the family and friends (41%).



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Bank interest rates may need to rise to fight inflation, experts say https://sendika12.org/bank-interest-rates-may-need-to-rise-to-fight-inflation-experts-say/ Sat, 12 Mar 2022 19:59:13 +0000 https://sendika12.org/bank-interest-rates-may-need-to-rise-to-fight-inflation-experts-say/ The Bank of Uganda (BOU) could gradually undertake a tightening of monetary policy (or an increase in interest rates) to rein in inflationary pressures building up in the economy, experts said. Monetary policy is set by the central bank with a future projection of inflation and the trajectory of economic growth in mind. Ugandan inflation […]]]>

The Bank of Uganda (BOU) could gradually undertake a tightening of monetary policy (or an increase in interest rates) to rein in inflationary pressures building up in the economy, experts said.

Monetary policy is set by the central bank with a future projection of inflation and the trajectory of economic growth in mind.

Ugandan inflation is now at 3.2%, the highest recorded by the Uganda Bureau of Statistics since June 2020.

The upward trend in inflation has largely been linked to global geopolitics in Russia and Ukraine, which has disrupted supply chains, affecting the prices of some food crops, energy and fuel prices.

Despite these events, the BOU says inflation remains below its 5% target but “there could be inflation surprises” in the coming months due to a stronger rise in food crops, prices raw material imports and exchange rate depreciation.

“We expect the BOU to begin its policy tightening cycle as inflationary pressures increase and evidence points to a stronger economic backdrop,” said Jeff Gable, chief economist at Absa Group.

“We expect interest rates to rise. When that will happen and to what extent is a real question mark due to the huge uncertainty created by the global environment in Russia and Ukraine.

Gable was speaking at the launch of the Absa Africa Financial Markets Index 2021 and Economic Outlook in Kampala.

The event was attended by BOU Deputy Governor Michael Atingi-Ego, Treasury Permanent Secretary Ramathan Ggoobi among other officials from key government agencies.

The conflict between Ukraine and Russia has seen energy prices soar over the past two weeks, triggering inflationary pressures globally.

“The price hike is a temporary shock,” Ggoobi noted in a bid to calm growing fears of rising commodity prices.

Higher inflation affects everyone – from higher prices at the pumping station to tougher choices on your next shopping list.

The central bank has kept the lending rate to financial institutions at a record high of 6.5% since June 2021.

The expected future tightening of monetary policy will move away from the very dovish stance adopted by the regulator over the past two years and intended to stimulate economic activity due to the pandemic.

In his February monetary policy briefing, Atingi-Ego noted that there are considerable uncertainties surrounding the inflation outlook for the country, the biggest being the disruption in global production supply chains.

“If the resumption of global cost-related inflationary pressures proves to be larger or more persistent than currently expected, it could spill over to the domestic economy, particularly if combined with a weaker shilling.

“If the exchange rate were to depreciate significantly, in part due to increased demand for foreign currency and tighter monetary policy in advanced economies, this would increase overall inflationary pressures and foster the need for tighten monetary policy in the future,” he said.

The higher costs of commodities such as fuel in the local market are influenced by global factors that are largely beyond the control of the BOU.

Raising bank interest rates, also known as central bank rates, is one of the many ways the BOU tries to control prices.

If interest rates rise, it can make borrowing more expensive, but it can also give savers a better return on their savings, which could encourage them to save rather than spend.

Encouraging people to save should slow the rise in prices of everyday goods. With fewer buyers in the market, sellers will find it difficult to raise their prices.

“The increase in the BOU loan rate may be positive, but it may not be the case if you have a loan. But it’s positive in the sense that it reflects an economy that has continued to recover from the worst of the pandemic and is approaching the status quo. That’s the message and we’re seeing it happening globally,” Gable said.

However, at the next monetary policy briefing due in April, the BOU monetary policy committee may have to tighten too quickly and slow economic growth projections or tighten too slowly and risk losing medium-term inflation expectations.

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Inflation, interest rates and military conflicts weigh on lenders https://sendika12.org/inflation-interest-rates-and-military-conflicts-weigh-on-lenders/ Thu, 10 Mar 2022 20:53:17 +0000 https://sendika12.org/inflation-interest-rates-and-military-conflicts-weigh-on-lenders/ Continuing a quarterly survey of mortgage executives that began in 2014, Fannie Mae released its latest Mortgage Lender Opinion Survey for the first quarter of 2022, seeing that lenders are becoming increasingly bearish due to current market conditions. The survey, which was conducted during the first two weeks of February among 200 senior executives, aims […]]]>

Continuing a quarterly survey of mortgage executives that began in 2014, Fannie Mae released its latest Mortgage Lender Opinion Survey for the first quarter of 2022, seeing that lenders are becoming increasingly bearish due to current market conditions.

The survey, which was conducted during the first two weeks of February among 200 senior executives, aims to gauge their views and perspectives on various dimensions of the mortgage market. The 200 leaders represent 188 institutions of which 83 were non-custodial mortgage banks, 62 depositary institutions and 40 credit unions.

Among respondents, 75% of mortgage lenders believe profit margins will decline over the next three months (up 10% from Q4 2021), 17% believe profits will remain the same, while 9% believe profits will increase. Respondents cited strong competition from other lenders, changing market trends and consumer demand as the main reasons for their responses on lower profitability expectations. This is the sixth quarter in which lenders’ profitability outlook is declining. This is also a new survey low.

Mortgage lenders also became more pessimistic about the economy as a whole in the first quarter, with 59% saying they thought the economy was on the wrong track, down from 29% in the first quarter of 2021. .

Across all loan types, more lenders reported lower consumer demand from the prior quarter for purchase and refi requests. Going forward, the vast majority of lenders continue to expect demand for refi mortgages to decline.

“For the sixth consecutive quarter, mortgage lenders expressed pessimism about near-term profit margin expectations amid headwinds from declining refinancing activity, slowing growth in mortgage demand from buying and narrowing spreads,” said Doug Duncan, Senior Vice President and Chief Economist at Fannie Mae. “For consumers, rising interest rates, lack of supply and sharp appreciation in home prices have reduced refinancing activity and further limited the affordability of buying a home, which , of course, dampens lenders’ expectations of future business activity Many uncertainties, including increased inflation and the Fed’s monetary policy response, which must now also take into account the inflationary impact of Russia’s war on Ukraine, suggests increased market volatility, but the general underlying trend of higher rates is in line with lenders’ expectations.

Other high-level takeaways from the report include:

The primary-secondary mortgage gap remains high

“The primary-secondary mortgage spread averaged 127 basis points in the third quarter of 2021, 9 basis points above the 2019 average, although down from the peak of 174 basis points seen in third quarter of 2020.”

Consumer demand expected to remain broadly flat for mortgage purchases, but decline for refinances

“For purchase mortgages, demand growth over the previous three months continued its downward trend. The net share of lenders reporting demand growth over the previous three months hit the lowest figure for any first quarter in the past two years for any type of loan. Over the next three months, the net share of lenders expecting demand growth increased significantly from last quarter for all loan types, but still posted the lowest value of all. first quarters of the survey’s history.

“For refinance mortgages, the net share of lenders reporting demand growth over the past three months, as well as the net share expecting demand growth over the next three months, remained similar. in the last quarter, but generally continued their downward trend for all types of loans. reaching the lowest readings in three years (since Q1 2019). For government loans, the net share expecting demand growth over the next three months has reached a new survey low (since the start of the survey in the first quarter of 2014).

Lenders expect credit standards to remain largely unchanged

“The net share of lenders reporting an easing of credit standards in the previous three months, as well as the net share expecting an easing in the next three months, have remained generally stable over the past four quarters. ”

Consumers Continue to Report Widely Divergent Home Buying and Selling Terms

“In coordination with PSB, Fannie Mae also surveys consumers monthly as part of its National Housing Surveyof which the Home buying sentiment index is derived. In February, consumers continued to report widely divergent views on the terms of buying and selling homes. Only 29% of consumers said it’s a “good time to buy” a home, while 72% think it’s a “good time to sell.” More consumers also said they expect mortgage rates and home prices to continue to rise over the next 12 months.

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Irish mortgage interest rates double eurozone average https://sendika12.org/irish-mortgage-interest-rates-double-eurozone-average/ Wed, 09 Mar 2022 11:53:33 +0000 https://sendika12.org/irish-mortgage-interest-rates-double-eurozone-average/ Average Irish mortgage interest rates are double the Eurozone average. Central Bank figures show the rate was 2.76% in Ireland in January, compared to 1.31% in the euro zone. The number of first-time buyers opting for variable rate mortgages has declined. Bonkers.ie analysis suggests they are opting for more expensive long-term fixed rates, due to […]]]>

Average Irish mortgage interest rates are double the Eurozone average.

Central Bank figures show the rate was 2.76% in Ireland in January, compared to 1.31% in the euro zone.

The number of first-time buyers opting for variable rate mortgages has declined.

Bonkers.ie analysis suggests they are opting for more expensive long-term fixed rates, due to recent speculation that the European Central Bank may start raising rates.

The website’s Darragh Cassidy tried to explain the change and said:

“Mortgage rates have been falling slowly but steadily in Ireland over the past few years. And they are still falling – for now at least. Today’s news that the average rate has risen suggests that more first-time buyers could opt for longer-term loans, more expensive fixed rates than before, which is not surprising since there has been talk in recent months of a rate hike by the ECB.

“Rapidly rising property prices could also have an effect.

“Lenders assess their mortgage rates based on the equity in the home or the size of the down payment they have against the loan. This is commonly referred to as the loan-to-value (LTV) ratio. The larger the deposit a home buyer has, the better the rate they will be offered by most lenders.

“However, rapidly rising property prices mean that buyers who previously could qualify for a cheaper rate for those with an LTV of less than 80% are now being pushed into a higher LTV bracket.”

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Will a debt consolidation loan affect my credit rating? https://sendika12.org/will-a-debt-consolidation-loan-affect-my-credit-rating/ Tue, 08 Mar 2022 18:09:05 +0000 https://sendika12.org/will-a-debt-consolidation-loan-affect-my-credit-rating/ Our goal at Credible Operations, Inc., NMLS Number 1681276, hereafter referred to as “Credible”, is to give you the tools and confidence you need to improve your finances. Although we promote the products of our partner lenders who pay us for our services, all opinions are our own. (The Credible Money Coach explains the possible […]]]>

Our goal at Credible Operations, Inc., NMLS Number 1681276, hereafter referred to as “Credible”, is to give you the tools and confidence you need to improve your finances. Although we promote the products of our partner lenders who pay us for our services, all opinions are our own.

(The Credible Money Coach explains the possible credit impact of a debt consolidation loan.)

Dear Credible Money Coach,

Is it true that when you take out a debt consolidation loan, it hurts your credit? —Twila

Hello Twila and thank you for your question. Debt consolidation affects your credit differently depending on how you structure it and manage loan repayments. This can be a smart way to manage multiple high interest debts without hurting your finances.

If you’re considering a personal loan for debt consolidation, compare rates from multiple lenders to get the best deal. Credible, it’s easy to view your prequalified personal loan rates in minutes.

Why do people consolidate their debts?

When you consolidate debt, you open a new credit account, such as a personal loan, credit card, or home equity loan, to repay several existing debts. This leaves you with one payment instead of multiple accounts to manage.

If you have good credit, you may be able to get an interest rate that’s lower than the combined effective rate you’re paying on multiple debts. This saves money in the long run.

Ways to Consolidate Debt

There are several options for consolidating debt, including:

Each of these options has advantages and disadvantages. For example, personal loan interest rates are generally lower than credit card rates. But if you continue to incur credit card charges, you could go into more debt.

Doing a 0% balance transfer could save you interest for 12 months or more. But if you don’t repay the entire balance before the end of the promotional period, the interest rate could increase significantly.

If you sign up for a debt management plan with a credit counselor, they can negotiate with your creditors to pay less than you owe, lower your interest rate, or extend your repayment period. But if you can’t repay a debt management plan as agreed, your credit may suffer.

The risks of a loan buy-back

A debt consolidation loan can lower your credit scores in the short term. This is because new credit applications cause your scores to drop. And if you use the loan to pay off a credit card and then close it, you reduce your total available credit, which leads to lower credit scores. (It’s best to keep a paid credit card open so you have more credit available in your name.)

However, if you make your new loan payments on time each month, your credit should recover fairly quickly from the slight hit it took when you opened the loan.

Should you get a debt consolidation loan?

A debt consolidation loan is not for everyone. I advise you to think twice before emptying a retirement account to pay off debt or putting your home at risk with a home equity loan or line of credit.

And if bad spending habits are causing your debt, working with a qualified credit counselor to improve your financial habits may be more helpful than lowering your interest rate with a debt consolidation loan.

If you decide a personal loan is right for you, Credible can help. compare personal loan rates from multiple lenders without hurting your credit.

Ready to know more? Check out these articles…

Need Credible® advice for a money-related question? Email our credible financial coaches at moneyexpert@credible.com. A Money Coach could answer your question in a future column.

This article is intended for general information and entertainment purposes. Use of this site does not create a professional-client relationship. Any information found on or derived from this website should not replace and should not be taken as legal, tax, real estate, financial, risk management or other professional advice. If you require such advice, please consult a licensed or competent professional before taking any action.

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About the Author: Laura Adams is a personal finance and small business expert, award-winning author and host of silver girl, a weekly audio podcast and top notch blog. She is frequently quoted in the national media and millions of readers and listeners benefit from her practical financial advice. Laura’s mission is to empower consumers to live richer lives through her work as a speaker, spokesperson and advocate. She earned an MBA from the University of Florida and lives in Vero Beach, Florida. Follow her on LauraDAdams.com, instagram, Facebook, Twitterand LinkedIn.

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Higher interest rates could put some Canadian businesses at risk, poll finds https://sendika12.org/higher-interest-rates-could-put-some-canadian-businesses-at-risk-poll-finds/ Mon, 07 Mar 2022 18:37:50 +0000 https://sendika12.org/higher-interest-rates-could-put-some-canadian-businesses-at-risk-poll-finds/ According to a new survey of middle-sized companies. The poll, conducted by accounting firm KPMG, highlights the tightrope the Bank of Canada must walk on as it tries to rein in rising consumer prices without strangling the recovery, especially more than the central bank said a robust recovery in business investment would be essential to […]]]>

According to a new survey of middle-sized companies.

The poll, conducted by accounting firm KPMG, highlights the tightrope the Bank of Canada must walk on as it tries to rein in rising consumer prices without strangling the recovery, especially more than the central bank said a robust recovery in business investment would be essential to support Canada’s economy as the COVID-19 pandemic recedes.

Fifty-five percent of businesses said a one-percentage-point increase in the prime rate would put “significant, substantial, or significant pressure on their business and cash flow,” according to the survey of early February business owners. CEOs of over 500 companies.

Companies in the consumer and retail sector were the most vulnerable, with 62% saying their cash flow would be under pressure, while only 27% of business leaders in the manufacturing sector shared this concern .

Investors should consider our abnormal world when preparing for the future

Rate hikes will hit Canada’s main growth engine the hardest. Will other sectors take over?

When business leaders were asked what level of increase in borrowing rates would jeopardize their growth or investment plans, 11% said a one percentage point increase would mark a tipping point for them, with that share rising to 33% if their borrowing costs increase by two percentage points.

“It’s surprising when you look at people’s stress levels with a 1.5 to two [percentage point] rate increases, but we have lived in a world of low interest rates for so long,” said Paul van Eyk, national head of restructuring and turnaround services at KPMG in Canada.

The Bank of Canada raised its benchmark rate by 0.25 percentage points earlier this month to 0.5%, its first rate hike since 2018. Many forecasters expect rate hikes to continue. continue, despite the uncertainty caused by the war in Ukraine, since inflation has shown few signs of slowing down. Scotiabank economists expect Canada’s key rate to hit 2% by the end of the year, rising to 2.5% next year.

Unlike previous cycles of rate hikes, companies have fewer levers to pull to relieve pressure on their bottom line, van Eyk said.

“You can’t fire people because you’re just trying to retain the people you have, your supply chain is in chaos, and then you add all the geopolitical events and the pandemic,” he said.

“You’ve got this perfect storm brewing where historically companies haven’t faced this level of chaos in the markets when rates go up.”

Corporate debt is one of the concerns facing the Canadian economy as interest rates rise. Canadian businesses were already heavily indebted before COVID-19 and have borrowed heavily throughout the pandemic.

This is offset by the ample cash that companies have accumulated, thanks to the cheap cost of debt and strong corporate earnings during the pandemic.

Mr van Eyk said it is too early to tell whether headwinds from rising rates, supply chain disruptions and geopolitical uncertainty will cause companies to struggle with their debt, but signs will first appear in the loan loss reserves of the major Canadian banks.

In a note on Friday, debt rating agency Fitch Ratings said banks’ loan loss provisions rose in their first fiscal quarter of 2022, but remained well below historical averages. Bad loans were more than 25% below pre-pandemic levels, Fitch said.

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Can rising interest rates really control inflation? https://sendika12.org/can-rising-interest-rates-really-control-inflation/ Sat, 05 Mar 2022 18:00:00 +0000 https://sendika12.org/can-rising-interest-rates-really-control-inflation/ Sun, Mar 6, 2022 12:00 a.m. Last updated on: Sun, Mar 6, 2022, 12:00 a.m. Treating inflation with high interest rates is like treating cancer with chemotherapy. You have to kill swathes of the economy to slow things down. Illustration: Collected “> Treating inflation with high interest rates is like treating cancer with chemotherapy. You […]]]>

Treating inflation with high interest rates is like treating cancer with chemotherapy. You have to kill swathes of the economy to slow things down. Illustration: Collected

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Treating inflation with high interest rates is like treating cancer with chemotherapy. You have to kill swaths of the economy to slow things down. Illustration: Collected

Russia’s military attack on Ukraine has unquestionably unbalanced the global economy. The newspapers are full of stories about the long-term impact of this war. Obviously, I share many of the dire predictions being made, but for this article I have chosen to address another equally burning and long-term issue: the role of rising interest rates. In simple terms, it revolves around the question, “How high should the interest rate rise to curb inflation?”

We know that the rate of interest determines the price of holding or lending money. Banks pay an interest rate on savings to attract depositors. Banks also receive an interest rate for money lent from their deposits. When interest rates are low, individuals and businesses tend to borrow more from banks, thereby increasing the money supply. As a result, inflation rises. On the other hand, higher interest rates tend to lower inflation.

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Although this is a very simplified version of the relationship, it highlights why interest rates and inflation tend to be inversely correlated.

Economists are increasingly concerned that the interest rate borrowers are paying will soon skyrocket and short-circuit the post-pandemic economic recovery. So why is the interest rate going up? How does it affect other macroeconomic variables, notably the price level? Can rising interest rates really curb inflation? I cannot answer all of these questions here for lack of space, but I hope to pique the interest of readers so that they can delve deeper into the puzzle over time.

A central bank can use changes in interest rates as a tool to fight inflation. It does this by fixing the commercial banks’ short-term borrowing rate – known as the repo rate in Bangladesh – and then these banks pass it on to consumers and businesses. This rate influences everything from credit card interest to mortgages and auto loans, making borrowing more expensive. On the other hand, it also increases savings and certificate of deposit (CD) rates and encourages saving.

In times of inflation, a central bank aims to make borrowing more expensive so that consumers delay their purchases, which dampens demand and controls prices. The biggest challenge is finding the right level so as not to raise it too high, which will stifle investment and hurt the poor.

As we see now, interest rates in countries around the world are rising after a lull in recent years. The Bank of England has started raising interest rates from historic pandemic lows and is under increasing pressure to raise the bank rate again. The US Federal Reserve is expected to begin raising the benchmark rate, known as the funds rate, at the next Board of Governors meeting on March 15-16. The European Common Bank may selectively raise rates, and there is no doubt that Asian countries will follow, although there may be a slight lag.

The novelty of this upward trend is that many central banks in North America and Europe have cut their respective interest rates to near-zero levels in an effort to meet the maximum stability targets for the economy. employment and prices. Unfortunately, inflation has recently spiked due to rising demand and supply chain bottlenecks. Central banks have now decided to curb aggregate demand and money supply to ease inflationary pressures.

The crucial question here is whether the observed movement in the two variables – interest rate and inflation – exhibits causality, or is it just coincidence? The question is immediately relevant: will the simple increase in the interest rate bring down the rate of inflation? Also, how high and how fast must the interest rate rise to have an impact on inflation? For example, if necessary, can the Fed raise interest rates to 5%, 10% or, as in the 1980s, 20%? Is it even calculable or predictable in advance? The answer to these questions is no.

Raghuram Rajan, former chief economist of the IMF and governor of the Reserve Bank of India, called interest rates a “brutal” tool in a situation where the real culprit is the creaky supply chain. The interest rate is a blunt tool also because aggregate price indices do not tell us precisely what prices are changing, for what reasons or to what effect.

“The government should take steps to protect the poorest through tougher price caps and direct financial support, while increasing investment in green projects to end our exposure to fossil fuel price volatility. and curbing demand from those who can afford it through wealth taxes,” Rajan said. adds.

Of course, it will take some time before any action taken by a central bank will have an impact on the economy and curb inflation. That’s why policymaking groups need to watch economic data carefully to decide how much and how often to raise rates.

And the biggest challenge is finding the optimal level of interest rate increases without plunging the economy into a slump. Treating inflation is like treating cancer with chemotherapy, as one expert once said. “You have to kill chunks of the economy to slow things down. It’s not nice treatment.”

Dr Abdullah Shibli is a senior research fellow at the US-based International Institute for Sustainable Development (ISDI).

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San Diego Mortgage Company offers fast approvals, loan terms and today’s low rates https://sendika12.org/san-diego-mortgage-company-offers-fast-approvals-loan-terms-and-todays-low-rates-2/ Fri, 04 Mar 2022 21:20:05 +0000 https://sendika12.org/san-diego-mortgage-company-offers-fast-approvals-loan-terms-and-todays-low-rates-2/ “San Diego Mortgage Company – Equis Mortgage Group, LLC” Check out a San Diego Mortgage Company, called Equis Mortgage Group, LLC and a San Diego Mortgage Broker, David LePari, for all your mortgage and real estate needs with fast approvals and today’s low rates. today. We were looking for a San Diego mortgage company that […]]]>

“San Diego Mortgage Company – Equis Mortgage Group, LLC”

Check out a San Diego Mortgage Company, called Equis Mortgage Group, LLC and a San Diego Mortgage Broker, David LePari, for all your mortgage and real estate needs with fast approvals and today’s low rates. today.

We were looking for a San Diego mortgage company that offers fast home loan approvalscoupled with great terms and today’s low rates, and we came across Equis Mortgage Group, LLC and San Diego mortgage broker, David LePari.

As a professional mortgage broker, Mr. LePari originates, negotiates and processes residential mortgage loans on behalf of the client. Below is a six-point guide to what services to offer and what to expect from a qualified mortgage broker representing a new local San Diego mortgage company:

1. PROVIDES ACCESS TO MOST HOME LOAN PRODUCTS

This includes the most common types of mortgages such as Conventional, FHA, Jumbo, VA, Reverse, and Refinance, as well as other eligible and non-eligible loan products listed under Additional Loan Types on their website. .

2. FIND THE MOST ADVANTAGEOUS OFFER FOR THE CUSTOMER

A solid and reputable company San Diego Mortgage Company represents its own interests rather than the interests of a credit institution.

They must act not only as an agent, but as a competent consultant and problem solver.

Having access to a wide range of mortgage products, Mr. LePari is able to offer someone the greatest value in terms of interest rates, repayment amounts and loan products.

The best mortgage brokers will go through interviews to identify their short and long term needs and goals.

Many situations require more than just using a 30-year, 15-year, or adjustable rate (ARM) mortgage, so innovative mortgage strategies and sophisticated solutions are the benefits of working with an experienced mortgage broker and M David LePari fits that. profile on the spot.

3. HAS THE FLEXIBILITY AND EXPERTISE TO MEET ITS NEEDS

When we do Equis Mortgage Group their new San Diego mortgage company, one can expect a broker who guides the client through any situation, manages the process, and mitigates obstacles in the road along the way. For example, if borrowers have credit issues, the broker will know which lenders offer the best products to meet their needs.

Borrowers who find they need larger loans than their bank has approved also benefit from a broker’s knowledge and ability to successfully secure financing, for almost any home type and circumstance.

4. SAVE ONCE

With Equis as his San Diego Mortgage Company, all it takes is one application, rather than filling out forms for each individual lender. Mr. LePari and his team can provide a formal comparison of all recommended loans, guiding you to information that accurately outlines cost differences, with current rates, points and closing costs for each loan reflected.

5. SAVE MONEY WITH NO HIDDEN COSTS

A reputable mortgage broker will disclose how they are paid for their services, along with details of the total loan costs.

6. PROVIDES PERSONALIZED SERVICE AND ADVICE

Personalized service is the differentiating factor when selecting a mortgage broker like Mr. David LePari and his team.

We should expect his San Diego Mortgage Broker to help smooth the way, be available for her needs and advise throughout the closing process.

We checked the qualifications, experience and GMB reviews of this San Diego Mortgage Company and asked for referrals and in the end we found a friendly broker and fast team that will match one to the right lender and loan with the best terms and today’s low rates so one can successfully get and quickly get approved for a home purchase or mortgage refinance.

Equis Mortgage Group, LLC NMLS #2009443 / DRE #01438695

David LePari, Broker NMLS #2027739

Media Contact
Company Name: Equis Mortgage Group, LLC
Contact: David Leparis
E-mail: Send an email
Call: (619) 368-0941
Address:11440 BERNARDO COURT WEST, SUITE 300
Town: San Diego
State: California
The country: United States
Website: equismortgagegroup.com/

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