Buying

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The average 30-year and 15-year mortgage rates have risen for the third week in a row, according to Freddie Mac. The increases over the past week were more substantial than over the previous two weeks, making it feel disheartening for aspiring home buyers who expected rates to go down in 2024.

Higher inflation numbers are keeping mortgage rates high for now. For the Federal Reserve to cut the federal funds rate — a move that typically also leads to lower mortgage rates — inflation needs to get closer to the central bank’s target of 2%. In March, inflation was up 3.5% year over year, according to the latest Consumer Price Index (CPI) report. This was a slightly higher increase than economists had predicted.

It’s unlikely that mortgage rates will significantly rise or fall during the spring and summer home-buying season, so you may not want to wait for rates to drop to buy a house. Instead, focus on factors you can control: Figure out how much house you can afford and improve your finances if necessary to get the lowest rate possible.

Learn more: The credit score needed to buy a house in 2024

Current mortgage rates

Mortgage rates are up across the board this week. The national average 30-year mortgage rate is 7.10%, which is 22 basis points more than last week and 71 points higher than this time in 2023.

The average 15-year mortgage rate is 6.39%. This is 23 basis points higher than last week and up 63 points since a year ago.

How mortgage interest rates work

A mortgage interest rate is a fee for borrowing money from your lender, expressed as a percentage. You can choose from two types of rates: fixed or adjustable.

A fixed-rate mortgage locks in your rate for the entire life of your loan. For example, if you get a 30-year mortgage with a 6.75% interest rate, your rate will stay at 6.75% for the entire 30 years unless you refinance or sell.

An adjustable-rate mortgage locks in your rate for a predetermined amount of time, then changes it periodically. Let’s say you get a 7/1 ARM with an introductory rate of 6%. Your rate would be 6% for the first seven years, then the rate would increase or decrease once per year for the last 23 years of your term. Whether your rate goes up or down depends on several factors, such as the economy and housing market.

At the beginning of your mortgage term, most of your monthly payment goes toward interest. Your monthly payment toward principal and interest stays the same throughout the years — however, less and less of your payment goes toward interest, and more goes toward the mortgage principal or the amount you originally borrowed.

Learn more: 5 strategies to get the lowest mortgage rates

Which mortgage term length should you get?

A 30-year fixed-rate mortgage is a good choice if you want a lower mortgage payment and the predictability that comes with having a fixed rate. Just know that your rate will be higher than if you choose a shorter term and will result in paying significantly more in interest over the years.

You might like a 15-year fixed-rate mortgage if you want to pay off your mortgage quickly and save money on interest. These shorter terms come with lower interest rates, and since you’re cutting your repayment time in half, you’ll save a lot in interest in the long run. But you’ll need to make sure you can comfortably afford the higher monthly payments that come with 15-year terms.

Read more: How to decide between a 15-year and 30-year fixed-rate mortgage

An adjustable-rate mortgage could be good if you plan to sell before the introductory rate period ends. Adjustable rates usually start lower than fixed rates, but there’s always the chance that the rate will increase once the rate-lock period is over. But if you get a 10/1 ARM, for example, and plan to sell before the 10-year period is up, you get to enjoy a lower rate and monthly payment without worrying about your rate increasing later.

Expert predictions for mortgage rates in 2024

In Fannie Mae’s latest rate forecast, the government-sponsored enterprise said it expects 30-year fixed rates to end 2024 at 6.4%. This is less optimistic than its February forecast when Fannie Mae expected rates to dip to 5.9% by the end of the year.

When the Federal Reserve lowers the federal funds rate, mortgage rates typically go down in response. However, according to the CME FedWatch Tool, there’s roughly a 98% chance that the Fed will not lower its rate at the central bank’s next meeting on May 1. So we probably won’t see significant changes anytime soon. If you’re ready to buy a house but holding out for rates to plummet first, it might not be worth the wait.

Learn more: What the Fed rate decision means for bank accounts, CDs, loans, and credit cards

Source: finance.yahoo.com

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When you think about the cars wealthy Americans choose to drive (or choose to have someone drive for them), you probably imagine customized Bentleys, Rolls Royces, Ferraris, and Lamborghinis. And in some cases, you’d be right. Those luxury car brands — along with BMW, Mercedes-Benz, and Audi — are popular with the rich and very rich in the U.S. and worldwide.

But they aren’t the car brands of choice for all high-income consumers. Some of the wealthiest people in the U.S. are driving vehicles from manufacturers that might surprise you, including Fords, Toyotas, and Hondas.

Read on for a look at the surprising car brands that rich Americans are buying and why.

What Is a Luxury or “Rich People” Car Brand?

Brands that are popular with wealthier car buyers typically have a reputation for superior performance, craftsmanship, high-quality materials (inside and out), and advanced technology. They also may have extra amenities to make them more comfortable and attractive, and to provide a better driving experience.

Luxury car brands also generally offer a higher level of customer perks, such as extended warranties, complementary maintenance, roadside assistance, and concierge services.

Of course, cars from more prestigious brands have higher price tags. New cars range from $40,000 to more than $100,000 — and over $500,000 for a higher-end brand like Rolls-Royce. Before you settle on any particular brand or model, you’ll want to determine how much you should spend on a car.
💡 Quick Tip: When you have questions about what you can and can’t afford, a money tracker app can show you the answer. With no guilt trip or hourly fee.

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Examples of Popular Luxury Car Brands

Several long-standing carmakers — and a few newer brands — are known to appeal to high-earning drivers:

•   Acura A division of Honda, Acura made the first true Japanese luxury car sold in America. Like Genesis below, Acura is known for offering buyers more bang for their buck.

•   Audi The German car manufacturer began gaining popularity stateside in the 1970s, and grabbed even more fans in 1980 when it unveiled the innovative Quattro, an all-wheel-drive sport coupe.

•   BMW Another German company, BMW sold 362,244 vehicles in 2023, setting a new annual record for the brand in the U.S. BMW is the best-selling luxury auto worldwide.

•   Cadillac Cadillac is America’s most prestigious domestic luxury automaker. Owned by General Motors, the brand has long been a favorite of older drivers. Models that appeal to younger buyers include its Escalade SUV and CTS sport sedan.

•   Genesis Genesis is a newer car brand (launched in 2009) that built its reputation by offering luxury at a competitive price. Its parent company is the Korean automaker Hyundai.

•   Land Rover The Land Rover brand, which began in England but now is owned by the Indian automaker Tata Motors, sells only SUVs. Its iconic Range Rover debuted in America in 1989.

•   Lexus Owned by the Japanese automaker Toyota, the carmaker was named the most reliable of all car brands in 2023 and 2024 by J.D. Power Associates. Lexus is known for its upscale designs, comfortable cabins, and a smooth, quiet ride.

•   Mercedes-Benz The German company, which has been making cars for more than 100 years, is known for its loyal fan base, attention to detail, and focus on customer service and comfort.

•   Tesla Tesla Motors is an American car brand that makes vehicles that run on electricity.

What Car Brands Are Rich Americans Choosing?

Luxury brands like BMW, Mercedes-Benz, and Lexus are among the most popular with wealthy American car shoppers who are looking for reliability, prestige, extra amenities, comfort, and top customer service. And Teslas, which range in price from about $43,000 to well over $100,000, remain among the top-selling electric vehicles in the U.S.

But the line between luxury and mainstream brands is blurring, according to the car-shopping website Edmunds. Carmakers like Ford, Volkswagen, and Mazda are adding more upgraded models to their lineups, while high-end makers are offering smaller and more affordable cars.

And then there’s a much-publicized report from Experian Automotive, which found more than 60% of Americans who earn $250,000 or more aren’t sticking strictly to luxury brands. When Experian crunched the numbers in their huge database to see what wealthier folks choose to drive, it turned out there were three Honda models, a Toyota, and a Volkswagen on their Top 10 list.

Rich and famous car buyers also tend to like their pickup trucks. And though the Tesla Cybertruck is the new celeb must-have, you might also see photos of Dwayne “The Rock” Johnson or Lady Gaga driving their Ford F150s, Sean Penn gassing up his Nissan Titan, or Ben Affleck in his Dodge Ram 2500.

Recommended: Car Value vs Truck Value

Pros and Cons of Luxury Car Brands

There are many reasons why people long to drive a luxury car — from the prestige to the performance to the high-end amenities and potential add-ons. But there are pros and cons to buying the kind of cars rich people often own:

Pros

•   High-end brands are generally known for their reliability and advanced technology.

•   Because luxury cars can quickly depreciate in value, used models can be found at bargain prices — especially if you’re buying a high-mileage car.

•   Luxury car brands often offer a more comprehensive warranty and other customer perks.

Cons

•   The cost of a high-end car can get in the way of important financial goals or keep you from enjoying things you care about, like good food and wine.

•   Luxury models tend to depreciate in value much faster than mainstream cars.

•   A luxury car can cost more to insure, and when the warranty runs out, it will likely cost more to repair.

Recommended: Should I Buy a New or Used Car?

Popular Alternatives to Rich Car Brands

While you’re saving up for a car, and before deciding which car brand you hope to purchase, take time to prioritize what you want from your ride. You may find you can get what you’re looking for without paying luxury prices. For example…

•   Safety First According to the Insurance Institute for Highway Safety, 2024’s safest cars include models from Kia, Honda, Mazda, Toyota, Nissan, and Subaru.

•   Luxe Interior U.S. News & World Report named Volvo, Chevrolet, Ford, Hyundai, GMC, Kia, Jeep, and Honda among the car brands with the nicest interiors in 2023.

•   Designer Chassis The Toyota Prius, Honda Accord, Hyundai Santa Cruz, Kia Soul and EV6, Jeep Wrangler, Mazda 3, and Ram 1500 all made U.S. News & World Report’s list of the best looking cars of 2023.

•   Most Reliable When Consumer Reports road-tested and ranked 34 car brands this year, the top 10 included Subaru (#2), Honda (#4), Mini (#6), Kia (#7), Mazda (#8), Toyota (#9), and Hyundai (#10).

•   Biggest Bang for Your Buck Honda and Kia had the most models on U.S. News & World Report’s list of the “2024 Best Cars for the Money.”

💡 Quick Tip: Income, expenses, and life circumstances can change. Consider reviewing your budget a few times a year and making any adjustments if needed.

Tips for Choosing a Car Brand

If you’re set on buying a luxury car, or if you’re still trying to decide which brand or model is right for you, here are a few things to consider:

•   Does the luxury car brand you’re looking at offer something you can’t get from a mainstream carmaker? It can help to test-drive cars from a few different brands to compare the features that are most important to you. You might end up confirming your decision to go with the luxury brand. Or you may find a mainstream model that offers high-end comfort and performance but at a more competitive price.

•   Do you plan to hold onto the car for a while, or will you sell it in a few years? Some luxury brands and models tend to lose value more quickly than others. (Here’s how to spot a good car-value estimate.) So you may want to research your top picks before you sign on the dealer’s dotted line and drive your new car off the lot.

•   Could you be satisfied with a used car from your favorite luxury brand? Because luxury brands tend to depreciate faster, you may be able to find a used model that’s much more affordable than buying new.

•   Can you afford it? Before you fall in love with that pricey BMW or Benz, you may want to take a look at another “b” word: your budget. Using a free budget app can help you figure out how much you can spend on your down payment, monthly car payment, and auto insurance costs, and if those costs will mesh with your other expenses and financial goals.

The Takeaway

Purchasing a luxury car is mostly an emotional decision: You buy one because you want it, not because you need it to get around.

If you’re rich, and you can afford to pay for the perks and prestige of an upscale brand, you may not give the cost a second thought. But even some wealthier car buyers are choosing mainstream brands, perhaps because they’ve found a model they want or they don’t care about the extras or the label.

How can SoFi help? Just as with any major purchase, it’s a good idea to do some research before you buy your next car. SoFi Relay can help you track your spending, monitor your credit, build a budget, and more. Once you run the numbers and know where you stand, you can feel more confident about your purchase, no matter what car you decide to buy.

See exactly how your money comes and goes at a glance.

FAQ

Which car brand is driven most by millionaires?

Though wealthy consumers are known for buying luxury car brands like Rolls-Royce, Mercedes-Benz, Jaguar, or Porsche, you might also find them driving mainstream brands such as Honda, Toyota, and Ford.

What is the most common car for rich people?

BMW is the best-selling luxury carmaker in the world.

What percentage of millionaires choose to buy used cars rather than new cars?

In their 2010 book The Millionaire Next Door, authors Thomas J. Stanley and William D. Danko state that nearly 37% of the millionaires they surveyed reported buying used cars. But in some cases, a millionaire’s “used car” may be one of several vehicles the driver owns, or even part of a collection of classic or vintage autos.

Photo credit: iStock/mevans

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Source: sofi.com

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The median monthly housing payment for U.S. homebuyers rose to a record $2,775 during the four-week period ending April 14, up 11% year over year, according to a Redfin report. 

The recent hotter-than-expected inflation reading sent mortgage rates upward. On Thursday, HousingWire’s Mortgage Rates Center showed the average 30-year fixed rate for conventional loans at 7.31%, up from 7.19% a week earlier. 

Additionally, Federal Reserve Chair Jerome Powell made statements at the Washington Forum on Tuesday that indicate there will be no rate cuts anytime soon because the economy and the labor market continue to run hot and inflation has remained sticky.

Furthermore, the median price for all types of existing homes rose to $393,500 in March, an increase of 4.8% from the median price of $375,300 in the same month last year, according to the National Association of Realtors (NAR). 

Despite the challenging housing market, demand isn’t fading. Mortgage applications,  for instance, increased for the second week in a row on the back of a strong economy.

According to Chen Zhao, Redfin’s economic research lead, some house hunters are eager to buy now as they fear a further increase in mortgage rates. Meanwhile, others have grown accustomed to elevated rates and have accordingly factored the inflated rates into their home purchase budget. 

“Home sales are slower than usual, but there are still people buying and selling because if not now, when?” Connie Durnal, a Redfin Premier agent in Dallas, said in a news release. “I’ve had a few prospective buyers touring homes for the last several years, since mortgage rates started going up, and they wish they would have bought last year because prices and rates are even higher now.

“My advice to them: If you can afford to and you find a house you love, buy now. There’s no guarantee that rates will come down soon.” 

At the end of March, NAR reported that total housing inventory sat at 1.11 million units, up 4.7% from February and up 14.4% from one year ago. 

Source: housingwire.com

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LED light strips give Bilal the ick because they tend to look cheap, when that is not the desired effect. “They do not look expensive, they don’t look high-end, they don’t feel like elevated decor,” he says. “They literally just feel like you ordered an LED strip off Amazon and stuck it to your wall. And that’s exactly what it is.”

Vivien of Posh Pennies is particularly averse to battery-operated sconces, detesting the fact that they require remotes and batteries, and that they eventually stop getting used because they require recharging. “If you’re serious about where you want your light, then get it wired, pop in a smart bulb, put it on a schedule, and call it a day! So worth it,” the interior design blogger and YouTuber explains. Bilal agrees that smart light bulbs are a much better alternative, especially if you’re looking for the ability to easily change the mood of a room with lighting.

Focusing on the screen, rather than the big picture of your space

As sharing interior design on social media gains more and more traction, and we become accustomed to seeing beautiful rooms on the reg, it can be tempting to focus only on what looks good onscreen. Imani Keal, a design blogger who specializes in renter-friendly decor and DIY, often wonders what’s going on beyond the frame of a quirky DIY space she sees on TikTok. “They sometimes don’t show the project in the context of the rest of the room or apartment, and it’s often because that project only looks good from one angle or as a vignette,” she explains.

It’s important to make sure a fun project actually works with the rest of your living space, rather than just conforming to the latest trend. “The purpose of creating a beautiful space is so that it looks and feels warm and welcoming in real life and on the internet, not just in five-second clips,” she adds. Garrett Le Chic fully agrees. As an interior designer, he’s all about making updates to your home that are consistent with its architecture.

“Renovating to change the style of your house in the long term doesn’t always make the most sense because it just requires a lot more effort, a lot more money, a lot more work than is really necessary,” he says. “When, if you took the core elements, the backbone of what the architectural style of your house is, and you apply that, it works better in the long term.”

Bland dust-collecting decor

There’s nothing like a good knickknack or piece of art to really liven up a room. With so many affordable online and brick-and-mortar home-goods stores, it’s easier than ever to find what you need to add in a space. This is both a blessing as a curse, as it means that now more than ever, there’s a plethora of mass-produced items with no personality taking up space and collecting dust over time.

On the subject of word art, Phoenix has one question: “Who is buying this?” He continues, “I know the ‘Live, Love, Laugh’ signs of the early 2000s have faded out, but now it’s like very weird quotes on boards that people are spending between 10 and 20 dollars on. The amount of staged homes that I’ve seen from real estate agents that have those too.”

Source: architecturaldigest.com