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Home buyers, entrepreneurs and public officials are confronting a new reality: If they want to hold off on big purchases or investments until borrowing is less expensive, it’s probably going to be a long wait, the New York Times reported. Governments are paying more to borrow money for new schools and parks. Developers are struggling to find loans to buy lots and build homes. Companies, forced to refinance debts at sharply higher interest rates, are more likely to lay off employees — especially if they were already operating with little or no profits. Over the past few weeks, investors have realized that even with the Federal Reserve nearing an end to its increases in short-term interest rates, market-based measures of long-term borrowing costs have continued rising. In short, the economy may no longer be able to avoid a sharper slowdown.

The chance for persistent inflation to keep interest rates higher and potential losses in the commercial real estate market are among the top concerns of respondents to a Federal Reserve survey on financial stability, the U.S. central bank said on Friday, Reuters reported. The latest version of the central bank's semiannual report found that three-quarters of survey respondents cited those two issues as prominent near-term risks. Concerns over bank stability following the failure of three large firms this spring were cited by roughly half, similar to levels seen in the May version of the report. Economic weakness in China had grown in the Fed's semiannual survey, cited by 44% of those surveyed as a top risk, compared to just 12% in May. But the war between Russia and Ukraine slipped to the 11th-most cited concern by respondents, after it was cited as the top financial stability concern one year ago. The Fed noted that its survey of looming risks was closed in early October, before war broke out between Israel and the Palestinian enclave of Gaza.

Researchers at the Federal Reserve Bank of New York are predicting that student loan repayments won't pose a huge headwind for the economy based on a small survey of borrowers, YahooFinance.com reported. The study released Wednesday found that the restart in loan payments would reduce borrowers' spending by $1.6 billion a month, or down 0.1 percentage point from August levels. Delinquency rates would also eventually return to pre-pandemic levels. "We expect the potential spillover to the broader economy to be limited, and we will continue to monitor developments in the coming months," the researchers wrote. The findings come as retailers, borrower advocates, and others worry about the potential ramifications of repayments after a 43-month pause. The study used the SCE Household Spending Survey that the New York Fed fields every four months. In the August 2023 edition, the researchers added special questions about student loan repayments. Of the 1,000 respondents, 225 had outstanding student loans and 151 of those indicated their federal student loans were previously paused, but will be entering repayment. Pandemic forbearance gave borrowers over $260 billion in waived payments that went to other spending and savings over the last three years, the study found. After the pause, borrowers on average expect to cut back their monthly spending by $56 from their monthly average they reported in August.

Florida’s explosion in insurance premiums threatens to ground the state’s highflying housing market. Florida home prices soared more than 60% since 2019, according to real-estate brokerage Redfin, the Wall Street Journal reported. That rate has slowed more recently, and the state’s home prices in September edged up 2.7% over the previous year, Redfin said. While rising interest rates and the large price run-up are the biggest factors, higher insurance costs are starting to play a role, brokers say. Home-insurance costs are rising everywhere, but they are rising especially fast in Florida where premiums have tripled in the past five years. Some premiums have increased by about nine times what they were last year, according to Oscar Seikaly, chief executive of NSI Insurance Group, who said he has handled insurance premiums that cost as much as $600,000 a year for multimillion-dollar homes. In few places are soaring premiums more apparent than in Flamingo Park, where a combination of older, historic homes and ballooning property values have caused insurance costs to double for many homeowners in the past year. Even though the West Palm Beach neighborhood resides on a coastal ridge, where most of the homes are well above sea level and outside the flood zone, insurance rates for wind coverage are soaring there.

The Consumer Financial Protection Bureau (CFPB) filed a lawsuit in federal court yesterday alleging that Freedom Mortgage Corp. submitted legally required mortgage loan data that was riddled with errors, according to a CFPB press release. The CFPB alleges that Freedom’s practices violate both the Home Mortgage Disclosure Act (HMDA) and a 2019 consent order. In a recent separate matter, in August 2023 the CFPB fined Freedom $1.75 million for paying illegal kickbacks for mortgage loan referrals. “The CFPB is suing Freedom Mortgage for violating a law enforcement order and for providing false data on its mortgage operations,” said CFPB Director Rohit Chopra. “The CFPB will continue to focus on ending the cycle of misconduct by repeat offenders in the financial industry.” Freedom Mortgage Corp. is a privately held nonbank mortgage loan originator and servicer headquartered in Boca Raton, Fla. In 2020, Freedom reported HMDA data on over 700,000 mortgage loan applications and originated nearly 400,000 HMDA-reportable loans worth almost $100 billion.

Consumer Financial Protection Bureau Director Rohit Chopra said if an attempt to invalidate his agency's funding is successful before the Supreme Court, it would add more uncertainty for the mortgage industry and create "a lot of headaches" for consumers, YahooFinance.com reported. “I think [on] the whole financial markets are much better off with the CFPB there,” Chopra told Yahoo Finance on Friday. "I think if a CFPB had existed in the early 2000s, we wouldn't have had a subprime mortgage crisis." The interview with Chopra was his first since the Supreme Court heard oral arguments this week in a challenge to the funding structure of the CFPB, a financial regulator that was created by Sen. Elizabeth Warren (D-Mass.) in the aftermath of the subprime housing meltdown and financial crisis in 2008. Payday lenders, who brought the challenge, have argued that the CFPB's funding that it receives through the Federal Reserve is unconstitutional and that funding should be appropriated by Congress. The Supreme Court justices, however, appear likely to uphold that structure based on what transpired Tuesday, when some of them sounded skeptical of the arguments made by the payday lenders.

Rep. Ayanna Pressley (D-Mass.) emphasized the disproportionate impact of student loans on Black borrowers during her latest call for debt cancellation, YahooFinance.com reported. "The student debt crisis is an economic justice, gender justice, and racial justice issue — Black borrowers — especially Black women — are among the most impacted by the student debt crisis," Pressley said at the recent Congressional Black Caucus Foundation’s (CBCF) annual legislative conference. "It is a crisis for Black America affecting our elders, our caregivers, our educators, and our families." Black borrowers hold the most student loan debt, according to a study by the NAACP, with 86.4% of Black bachelor’s degree holders and 81% of Black students pursuing master's and doctoral degrees borrowing for school. That greater debt burden is a barrier to building wealth and contributes to the racial wealth gap, preventing borrowers from homeownership, starting businesses, or paying for their kids’ college.

Federal housing authorities persuaded Texas Capital Bancshares Inc. to help with the fallout from a bankrupt reverse-mortgage provider, then went back on their promises of financial support, the company said in a lawsuit Wednesday, Bloomberg News reported. The Government National Mortgage Association, known as Ginnie Mae, canceled liens on tens of millions of dollars in collateral after the bank agreed to make a loan to Reverse Mortgage Funding LLC, according to the lawsuit. The loan was intended to prop up customers of the failed company, which was one of the largest providers of government-backed reverse mortgages. The firm’s Texas Capital Bank unit provided the funds “on an emergency basis, in an effort to protect thousands of senior citizen mortgagors,” the bank said in the complaint. “Just weeks later, Ginnie Mae reversed course and purported to leave TCB empty-handed.” The controversy traces its roots to last year’s bankruptcy of Reverse Mortgage Funding. Like many in the industry, the firm had been squeezed by surging interest rates and regulatory pressures. Texas Capital claims in the lawsuit that Ginnie Mae persuaded it to provide debtor-in-possession financing after the failure of Reverse Mortgage Funding.

The Biden administration announced today that it is forgiving another $9 billion in student loans for borrowers who have been on an income-driven repayment (IDR) and Public Service Loan Forgiveness plan, The Hill reported. The $9 billion will forgive the debt of 125,000 borrowers, with 53,000 getting relief under the Public Service Loan Forgiveness program, 51,000 through an IDR plan and 22,000 who have a total or permanent disability. Those on the IDR plan have been making payments for more than 20 years but never got the student debt relief they were promised, according to the White House. The Public Service Loan Forgiveness program includes those who have been working in a government position or nonprofit for more than ten years. The relief helps only a small portion of student loan borrowers as more than 45 million people still hold $1.75 trillion in student loans, while college prices continue to increase.