Credit Sesame’s personal finance news roundup March 1, 2025. Stories, news, politics, and events impacting personal finance during the past week.
Consumer confidence plunged in February 2025
The University of Michigan’s Index of Consumer Sentiment dropped by 9.8% in February. All five components that comprise the Index fell during the month, led by a 19% drop in the outlook for buying durable goods. Those are big-ticket items such as cars, furniture, and appliances. Consumer assessment of current conditions fell by 12.5%, while expectations for the future fell by 7.9%. One thing in particular that is weighing on consumers is a rising expectation for inflation. Inflation expectations rose from 3.3% to 4.3%. That was the second consecutive sizeable monthly rise in inflation expectations. See details at UMich.edu.
Federal court blocks student loan payment assistance program
A Federal appeals court has disallowed a federal student loan program, the Saving on a Valuable Education (SAVE) plan. The SAVE plan was created during the Biden administration. It was designed to reduce monthly payments for low-to-middle-income borrowers. It was intended to be even more affordable than other income-based repayment plans. Future payment requirements for borrowers who opted for the SAVE plan will remain uncertain until the Department of Education issues revised guidelines in response to the recent ruling. See article at MSN.com.
Student loan delinquencies to hit some credit scores soon
Student loan payments resumed last fall after a pandemic-era pause, and now students who have failed to make those payments will start being reported to credit bureaus as delinquent. According to a VantageScore report, the end of the forbearance period affected 22 million student loan borrowers, and 43% are thought to be behind on their payments. Those delinquent borrowers could see declines in their credit scores of as much as 129 points. In contrast, borrowers who have resumed payments may see a modest benefit to credit scores of up to 8 points. See details at VantageScore.com.
House Majority Leader threatens to cancel oversight of fintechs
House Majority Leader Steve Scalise has targeted recent regulation of payment services like Zelle for reversal. Late last year, the Consumer Financial Protection Bureau (CFPB) ruled that apps such as Apple Pay, Google Pay, and Venmo would be subject to the CFPB’s supervision. Though these financial technology companies are not formally registered as banks, the CFPB’s view was that they provide bank-like services. Therefore, they should be subject to the same oversights as banks to protect the public. However, Scalise and some other lawmakers want those fintechs to remain free to operate as they choose. See article at Yahoo.com.
FDIC reports generally stable conditions for banks
The Federal Deposit Insurance Corporation (FDIC) released its report on the banking industry for the fourth quarter and calendar 2024. The FDIC reported generally solid financial conditions for banks, with modest loan growth for the year despite a decline in the first quarter. Deposit growth was higher in 2024 than in 2023. Net interest income improved later in the year. Concerns cited included elevated unrealized losses due to a rise in long-term interest rates late in 2024. Also, while asset quality is generally good, there are exceptions that the FDIC is monitoring closely. See full report at FDIC.gov.
2024 Q4 economic growth stronger than previously thought
The Bureau of Economic Analysis released its second Gross Domestic Product (GDP) estimate for the fourth quarter of 2024. This new estimate is a little shy of 0.1% higher than the advance estimate released last month. GDP grew at an inflation-adjusted annual rate of 2.3% during the quarter, bringing economic growth to 2.8% in 2024. With the increase during the fourth quarter, GDP has grown for 11 straight calendar quarters. See details at BEA.gov.
Serious delinquency rates increased in January 2025
Consumers are falling further behind on their debt payments, according to the latest credit industry snapshot from TransUnion. Delinquency rates rose for mortgages, auto loans, credit cards, and personal loans. Average balances owed declined for credit card accounts but increased for mortgages and personal loans. See report at TransUnion.com.
Mortgage rates continue to descend
30-year mortgage rates fell for a sixth week in a row. 15-year mortgage rates have fallen for five of the past six weeks. Over the past six weeks, 30-year rates have fallen by a total of 0.28% to reach 6.76%. During the same period, 15-year rates have fallen by a total of 0.33%, which brings them to 5.94%. However, the recent easing of rates still hasn’t come close to negating the steep rise that preceded it. 30-year rates remain 0.68% higher than at the end of September 2024, while 15-year rates are now 0.79% above that low point. See rate data at FreddieMac.com.
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