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With tappable home equity near historic highs and a preference among a majority of baby boomers to remain in their homes, several reverse mortgage lenders have recently launched products to capture the greater opportunity in this part of the market.  Demographic trends suggest a market primed for growth and current interest rate levels also make home equity loans appealing. The National Reverse Mortgage Lenders Association found tappable equity among homeowners 62 and older stood at almost $14 trillion at the end of 2024. At the same time, over two-thirds of the baby boomer generation born between 1946 and 1964 indicated they hope to age in place, according to Freddie Mac research, prompting businesses to turn their attention to the reverse mortgage market.  While the Federal Housing Administration's Home Equity Conversion Mortgage has been a popular draw option available to seniors for years, 2025 arrived with the launch of several new proprietary loan products from the top reverse lenders intended to complement HECMs.Differentiating themselves from the HECM program, which has a minimum eligibility age of 62, reverse mortgage lenders often open up their proprietary offerings to a wider age range and offer a larger maximum amount. Like HECMs, though, the proprietary loans require homeowners to make regular timely payments on property tax, insurance and maintenance fees.While some proprietary mortgages have been on the market for years, following are a few of the new additions arriving on the scene in the first few months of 2025.Longbridge offerings preserve equity, offer higher LTVsLaunched in May, Longbridge Financial's Platinum Preserve reverse mortgage allows homeowners to take out a portion of available equity for the loan, while setting aside between 10% and 40% of their property's value for future needs or as a bequeathal to heirs or other beneficiaries. "We designed Platinum Preserve with that in mind — to help retirees unlock some of the equity in their home today, while still preserving a meaningful portion for the future. It offers the best of both worlds: more financial freedom now, while leaving a legacy down the road," said Longbridge CEO Christopher Mayer in a press release.Unlike HECMs, the fixed-rate loan does not require mortgage insurance at origination, which can lower upfront costs. Platinum Preserve is currently offered in 21 states for borrowers 55 and older with homes valued at $450,000 or more. The new product comes following the release earlier this spring of another addition to Longbridge's proprietary portfolio. Platinum Peak was created for borrowers valuing maximum proceeds over rate sensitivity. With higher loan-to-value ratios than other types of reverse mortgages, the product makes home equity available to borrowers who previously might have been short to close. Longbridge expects Platinum Peak to appeal to reverse borrowers on the younger end of the eligibility scale with immediate needs to take a large draw on equity.  PHH Mortgage returns to proprietary market with EquityIQPHH, a subsidiary of Onity Group, recently re-entered the proprietary reverse space in April with EquityIQ. The product will be marketed under PHH's Liberty Reverse Mortgage brand and made available through its wholesale channel. With a maximum available loan amount of $4 million, well above the HECM maximum, EquityIQ similarly does not require upfront mortgage insurance. PHH will require parties to the loan to receive approved mortgage counseling. "We believe EquityIQ can be a valuable option for our wholesale partners and their clients, and we look forward to continuing to expand our product options," said PHH Mortgage chief growth officer Rich Bradfield.The company previously launched a proprietary loan prior to Covid-19 but discontinued the offering earlier this decade. Mutual of Omaha launches SecureequityAlso with the same $4 million maximum loan limit, Mutual of Omaha introduced Secureequity earlier this year, specifically aimed at homeowners aged 55 or older who own high-value properties.   Eligibility requirements for Secureequity largely fall in line with those of other proprietary reverse loans. Borrowers can receive proceeds in one lump sum or establish a line of credit.

Federal Housing Finance Agency Director Bill Pulte said he cannot envision a situation where President Donald Trump relinquishes control of Fannie Mae and Freddie Mac, emphasizing there is a need to keep implicit guarantees intact as the administration considers potential options for the two mortgage giants. READ MORE: What Trump's latest GSE comments could mean for mortgages"I don't see any scenario where the president isn't in control of Fannie Mae and Freddie Mac," Pulte said during an interview with Bloomberg Television Thursday.Trump has said that the US government would retain guarantees and an oversight role over Fannie and Freddie even as he pursues a public offering for the mortgage giants. The companies, which play a crucial role in the market for mortgage-backed securities, have been under government conservatorship since the 2008 financial crisis. READ MORE: Fannie Mae partners with Palantir to weed out fraudAsked about whether there was a need to raise the capital requirements for Fannie and Freddie, Pulte said he didn't think it was necessary.Shares of Fannie and Freddie soared after Trump said he was considering releasing the entities from conservatorship earlier this month, reaching their highest levels in 16 years. READ MORE: Pulte plans credit score move as legislators back tri-mergePulte said he would be meeting with Treasury Secretary Scott Bessent and Commerce Secretary Howard Lutnick about potential options for the two entities. 

Krisztian Bocsi/Bloomberg The Federal Reserve's preferred measure of inflation continued to inch toward its 2% target last month, but the impact of higher tariffs have yet to reflect meaningfully in government data.The headline Personal Consumption Expenditure, or PCE, index increased 2.1% on an annualized basis in April, according to a report released by the Bureau of Economic Analysis on Friday morning, down from the 2.3% year-over-year increase registered in March. Core PCE inflation, which factors out food and energy prices, came in at 2.5%, down from 2.6% the month prior. Both readings were in line with Wall Street expectations and matched the trajectory of the other key government price measure, the Consumer Price Index, which was released two weeks ago. The PCE report supports recent assertions by Fed officials that inflation continues to trend in the right direction and the underlying economy remains solid, but it leaves open the biggest question for the Federal Open Market Committee — how the Trump administration's trade policies will impact the economy. "If the increases in tariffs announced so far are sustained, they are likely to interrupt progress on disinflation and generate at least a temporary rise in inflation," Fed Vice Chair Philip Jefferson said earlier this month. "Whether tariffs create persistent upward pressure on inflation will depend on how trade policy is implemented, the pass-through to consumer prices, the reaction of supply chains, and the performance of the economy."During their last meeting on May 6 and 7, FOMC participants expressed a range of views about how tariffs might impact employment and prices, with some expecting the shock to be transitory while others worried about the ramifications of prolonged supply-chain disruptions."Potential disruptions to supply chains and distribution networks are particularly acute for small businesses, which are less diversified, less able to access credit, and hence more vulnerable to adverse shocks," Fed Gov. Michael Barr said on May 15.Since then, the U.S. has announced a trade deal with the U.K. and negotiated a temporary detente in its trade war with China. Then, this week, the U.S. Court of International Trade blocked President Donald Trump's use of worldwide and retaliatory tariffs, finding that the executive does not have the express power to impose such restrictions. An appeals court then put that ruling on hold, allowing the tariffs to be imposed while the White House challenges the trade court's decision. Should the trade court's ruling be upheld, many of the most restrictive levies rolled out by the White House last month could be nullified, an outcome that could put the Fed back on track to cut rates sooner rather than later.During a Thursday morning appearance at the economic conference in Michigan, Federal Reserve Bank of Chicago President Austan Goolsbee said if the ultra-high tariffs announced in April do not come to pass — either because of the court ruling or some series of negotiations — the underlying course of the economy and inflation could enable the Fed to resume the monetary easing campaign that was put on hold in January.Even if the tariffs do not go away entirely but instead remain around 10% — significantly higher than the overall average of less than 3% before the April rollout but well below the more than the 20% levy originally proposed — some on the Fed are confident the economy would be able to absorb the higher costs with minimal disruptions."I'm much more optimistic now than I was a month ago that we are going to be able to get a decent … average tariff across the world," Fed Gov. Christopher Waller said earlier this month. "Once Secretary [Scott] Bessent took over, started cutting these deals — it sounds like there's a lot more on the table — that's all good news for the economy."

Long out of favor, adjustable-rate mortgages are quietly making a comeback.To be fair, they are still pretty fringe, but the 30-year fixed is beginning to lose market share again.At last glance, the ARM-share of mortgage applications was 7.5%, per the Mortgage Bankers Association (MBA).This is still pretty low, but it has been on the rise over the past year – it was 6.4% a year ago.Of course, back during the early 2000s it hovered between 25% to 35% at one point!UWM Launches a 5/1 ARM for FHA and VA LoansThe nation’s largest mortgage lender by loan volume, United Wholesale Mortgage, announced the arrival of new adjustable-rate mortgage (ARM) products this week.The offering includes a 5/1 ARM for both FHA loans and VA loans, both of which have seen their market share rise in recent months.In fact, government purchase loan applications have risen about 40% year-over-year, per the MBA, possibly due to more lenient debt-to-income ratio (DTI) requirements.Or maybe because mortgage rates on government-backed loans tend to be cheaper than conforming loans backed by Fannie Mae and Freddie Mac.Now home buyers who work with a mortgage broker (who works with UWM) will be able to get their hands on an ARM.As noted, it’s just one variety, which comes with a fixed interest rate for the first five years of the loan term.After those five years are up, it becomes annually adjustable for the remaining 25 years. Like the 30-year fixed, it is also a 30-year loan.The key difference is the interest rate is only fixed for the first 60 months.This will require the homeowner to make a decision, whether it’s refinancing the mortgage, selling the property, or letting the ARM adjust, potentially higher.Why Adjustable-Rate Mortgages Now?So the obvious question here is why is UWM rolling out ARMs now? What changed? Why didn’t they have them before?Well, for much of the past decade and change, it was a no-brainer to take out a fixed-rate mortgage. Why wouldn’t a homeowner choose a 30-year fixed with an interest rate between 2-4%?Or perhaps a 15-year fixed mortgage with an even lower rate?The answer is they wouldn’t unless they were super wealthy and got a sweetheart deal at a bank like the now-defunct First Republic.But since early-2022, mortgage rates began rising, and fast. Today, they are no longer on sale, even if they remain below their long-term average of 7.75%.So it makes perfect sense to offer additional options that could save home buyers money.And it highlights the shift away from the 30-year fixed being the be all, end all home loan option.Simply put, this new product allows mortgage brokers to offer lower mortgage rates and monthly payments to their customers versus comparable fixed-rate mortgages.It also allows them to refinance these very loans in the near future if rates comes down!Coming to Terms with Higher-for-Longer RatesIt also makes you wonder if UWM sees a higher-for-longer scenario for mortgage rates. As such, they might be moving away from temporary rate buydowns and giving borrowers more time.Temp buydowns only last 1-3 years, before the payment goes up. These ARMs give borrowers five full years to hope for something better.So perhaps it is a sign of the times, that the buy now, refinance later thing didn’t work, and now you’ve got to hunker down for the long-haul.For the record, qualifying is easier on adjustable FHA and VA loans because you can generally use the initial start rate, whereas conforming loans require the start rate plus 2% for 5/1 ARMs.For example, if the 5/1 ARM rate were 6%, the borrower would need to qualify at 8%, per Fannie Mae. That makes them a lot tougher to qualify for.So there you have it. Perhaps folks are coming around to the idea that ARMs aren’t so bad.They were certainly bad news in the early 2000s, but those ARMs were riddled with other problems, whether it was prepayment penalties, stated and no doc underwriting, or even negative amortization.A 5/1 ARM is pretty innocuous in comparison, though risks do remain.So if you’re considering an ARM, know what you’re getting into and formulate a plan for the first adjustment, which could be higher.Read on: ARM versus Fixed-Rate Mortgage Pros and Cons(photo: Elvert Barnes) Before creating this site, I worked as an account executive for a wholesale mortgage lender in Los Angeles. My hands-on experience in the early 2000s inspired me to begin writing about mortgages 19 years ago to help prospective (and existing) home buyers better navigate the home loan process. Follow me on X for hot takes.Latest posts by Colin Robertson (see all)

United Wholesale Mortgage is victorious in yet another challenge to its "All-In" initiative after a federal appeals court ruled against a Florida brokerage.The Okavage Group filed an antitrust suit against UWM in 2021 over the megalender's ultimatum for brokers working with competitors Rocket Cos. and Fairway Independent Mortgage Corp. The brokerage, led by Dan O'Kavage, refused to sign the ultimatum because Fairway and Rocket often offered better deals for its clients, according to court filings. A Florida district court last September dismissed the brokerage's lawsuit, as judges suggested the plaintiff failed to allege a conspiracy between UWM and industry brokers. The Okavage Group appealed that ruling last year, but it was defeated this week as the appeals court justices affirmed the lower court's decision. The three judges of the U.S. Circuit Court Eleventh District did not opine further in their 1-page decision. The smaller firm could appeal that ruling to the Supreme Court, which is highly unlikely to hear the case.Neither company, nor attorneys for the parties responded to requests for comment Thursday. UWM's All-In continues to survive scrutinyCounsel for the Okavage Group disputed a lower court's assessment of their complaint, which painted All-In as a "hub-and-spoke" conspiracy between the lender and brokers. The plaintiff also cited comments by UWM President and CEO Mat Ishbia about the ultimatum and its purported success as evidence of a scheme.In a 74-page response filed in February, UWM characterized the Okavage's legal maneuvers as publicity stunts. It supported All-In as a protection for the wholesale channel, as Rocket and Fairway were originating loans through brokers before converting their customers to their retail channels. Fairway has since exited the wholesale channel. The Okavage Group in the lower court fight also attempted to incorporate the incendiary accusations against UWM in a Hunterbrook Media report last April. A District Court judge said that article's contents wouldn't fix the deficiencies in the brokerage's complaint. A complaint against UWM regarding the Hunterbrook findings remains pending. Separately, the Ohio attorney general sued the Pontiac, Michigan lender in April, raising similar accusations of predatory business practices and "loyalist brokers".Another challenge to All-In by Southern California-based America's Moneyline also remains pending in a Michigan federal court. UWM meanwhile has notched early victories in lawsuits accusing two other brokerages of violating the ultimatums, and reached a $40,000 settlement with a separate company in 2023.The company in a recent first quarter earnings cited Inside Mortgage Finance data showing it had a 42.4% wholesale market share last year, far ahead of Rocket Mortgage's 10.4% share and PennyMac Financial's 3.1% share. 

Homebuyers in the current Spring season are having to come up with larger monthly principal and interest payments, although a measure of relief might be on the way.The Mortgage Bankers Association Purchase Application Payment Index rose to $2,186 in April from $2,173 in March, although it is down from $2,256 one year ago."Homebuyer affordability conditions declined somewhat in April and remain elevated overall," said Edward Seiler, the MBA's associate vice president, housing economics, and executive director, Research Institute for Housing America, in a press release. "Economic uncertainty and high mortgage rates continue to weigh on prospective buyers' decisions on whether to enter the housing market."But a report from Redfin which covers the four-week period ended May 25 finds the median monthly mortgage payment rose year-over-year by 3.6% to $2,860, which it says is $25 shy of the all-time high.The increase was attributed by Redfin to the weekly average mortgage rate as of May 22 reaching 6.86% (according to Freddie Mac), the highest level in three months, along with the median home-sale price rising 1.9% year over year. Freddie Mac's May 29 Primary Mortgage Market Survey, which came out after the Redfin report, was even three basis points higher, to 6.89%.But Redfin said the situation is starting to turn around for buyers, as home prices in 11 of the nation's largest 50 markets are already falling. The nationwide median price should be lower by the end of this year, it expects.Another reason prices are likely to decline is the continued growth in the number of buyers versus a falloff in the share of sellers.In a separate data analysis by Redfin, the housing market currently has approximately 1.9 million sellers and 1.5 million buyers, or a 33.7% gap. Since records started being kept in 2013, this is the largest variance. Last year it was 6.5% in favor of sellers; for most of the period between 2020 and October 2023, buyers outnumbered sellers.Part of this growing gap is sellers are not realizing the housing market has changed from the recent past."Many are still holding out hope that their home is the exception and will fetch top dollar," said Redfin Senior Economist Asad Khan, in a press release. "But as sellers see their homes sit longer on the market and notice fewer buyers coming through on tour, more of them will realize that the market has adjusted and reset their expectations accordingly."Nationwide, an average of 5.5 engaged shoppers have acted by saving or sharing data on properties listed on Zillow. But a wide variation between markets exists for this activity.A quartet of cities in the Northeast lead the way: Buffalo, New York, has 12.7 engaged shoppers, while Hartford, Connecticut is at 11.3, Providence, Rhode Island at 10.8 and Boston at 10.3.At the other end, Miami has 2.6 engaged buyers, the lowest share nationwide, followed by Houston at 3.4."Inventory is up 20% over last year, and about one in every four sellers are cutting prices," said Zillow Senior Economist Orphe Divounguy in a press release. "Still, there are areas where competition is intense and there are bidding wars for most homes."In a May 28 comment on mortgage rate movements over the previous week, Kara Ng, senior economist at Zillow Home Loans noted macroeconomic uncertainty is keeping people out of the home purchase market."The spring shopping season got off to a slow start in April, despite buyers seeing more options and better affordability nationwide compared to last year," Ng said. The good news, she continued, "Buyers have access to the most housing inventory since August 2020, and mortgage payments are down by 1.3% compared to a year ago."Meanwhile, pending home sales had their largest drop since September 2022, data from the National Association of Realtors said."Elevated mortgage rates and economic uncertainty are headwinds for the housing market," Odeta Kushi, deputy chief economist at First American, said in a statement on the NAR data. "However, rising inventory, which puts downward pressure on prices and allows incomes to catch up, serves as a tailwind."The MBA also sees the market changing in favor of buyers based on the data used for the PAPI calculations."Even with the increase in mortgage rates over the month, the median purchase application loan amount decreased slightly to $328,932, indicating that home prices are moderating," Seiler said. "Slower home-price growth, and the overall trend of more inventory, are positives for housing this summer."Expressed as an index value, the national PAPI decreased 0.6% to 163.0 in April from 164.1 in March.  It is also down from 176.8 for April 2024.Median earnings rose 4.8% year-over-year and payments decreased 3.1%, with the improved affordability driving the PAPI down 8.4% on an annual basis, the MBA said.

A coalition of elected officials across the country is calling on Congress to continue funding of affordable housing programs targeted for elimination by the Trump administration. Trump's proposed fiscal year 2026 budget calls for the cancellation of the Community Development Block Grant and Home Investment Partnerships programs, both offered through the Department of Housing and Urban Development. The two HUD programs provide grants to local and state jurisdictions that create affordable housing and economic development opportunities to promote community investment. Axing CDBG and Home would save HUD over $4.5 billion, according to the Trump administration. Both are among a long list of cuts to government-sponsored programs and agencies that have been a trademark of President Trump's second term.  "Eliminating CDBG and Home would devastate local economies and erase hard-won progress, especially in rural and underserved areas," said Vicki Watson, executive director of the National Community Development Association, a nonpartisan nonprofit that helps administer HUD funding to local communities. In a letter to the Senate and House Appropriations Subcommittee on Transportation, Housing and Urban Development, close to 400 local and state leaders underscored the need for such programs to meet housing needs in communities of all sizes. Signees included leaders from the National Association of Counties, National League of Cities and U.S. Conference of Mayors, who called on Congress to continue government support. "Hundreds of U.S., state and local elected leaders across the nation agree that these programs work. The idea that cities, counties and municipalities should shoulder the burden of funding them ignores both the scale of the need and the federal government's responsibility to invest in equitable growth," Watson added.  The groups asked Congress to reject Trump's proposals and maintain funding at a minimum of fiscal-year 2025 levels. The federal fiscal calendar begins on Oct. 1.  The letter noted the Home program's success in building and rehabilitating housing to add much needed inventory. CDBG also provides funding tailored to each individual community's needs, with benefits going to every state, it said. Trump Administration's broader cuts to expensesSince taking office in January, President Trump has focused on slashing federal spending often with the complete elimination of programs and initiatives offered through government agencies. The Trump administration frequently relied on analysis from the Elon Musk-led Department of Government Efficiency, but DOGE also faced allegations of exceeding its authority and overstating the amount of cost savings to be achieved. HUD Director Scott Turner similarly embarked on cost-cutting measures since being appointed to head the department, launching his own DOGE task force in February. Among other proposed HUD cuts in Trump's budget are a large reduction in state rental-assistance block grants and the elimination of other programs that create housing opportunities in Native American communities. Earlier this month, Turner also celebrated rollbacks he made to the Affirmatively Furthering Fair Housing rule, effectively removing regulations on developers to show compliance with measures focused on anti-discrimination and accessibility. At a conference in May, Turner said his move would give more power to state officials to create their own laws.

New "zombie" property numbers from Attom show that to date they haven't changed much despite a spike in foreclosure filings.Foreclosure filings jumped 14% in April compared to the same month the previous year, but property vacancies remained stable, according to Attom's second quarter report. ICE Mortgage Technology's recent report also noted a marked increase in foreclosure activity during April. One out of every 14,207 homes, or 7,329 of 222,358 preforeclosure properties, were unoccupied during the period Attom studied by analyzing data from tax assessors."Thankfully, we're not seeing a lot of homes sitting vacant due to pending foreclosures, which is good for families, neighborhoods and the market. However, foreclosure filings have shown a recent uptick," Attom CEO Rob Barber said in a press release.Vacant property rates have remained low amid the release of some distressed mortgage inventory from the pandemic and financial pressure on consumers because housing demand remains strong enough to absorb many of those on the market. (Also temporary pandemic constraints around foreclosures did include some leeway for vacant and abandoned properties to move forward, reducing the potential for backlogs in this area.)"So far, buyers seem to be scooping up these repossessed homes relatively quickly, so they aren't sitting empty," Barber said. "Nobody wants to see a return to the days of the 2008 housing crisis when vacant, blighted homes were common."States, metros with large zombie-property sharesZombie property shares were the highest in the following 10 states: Oklahoma, 2.42%; Kansas, 2.29%; Alabama, 2.16%; Missouri, 2.15%; West Virginia, 2.1%; Indiana, 2.02%; Florida, 2.0%; Ohio, 1.99%; Michigan, 1.98%; and Mississippi, 1.92%.Investor-owned homes had higher vacancy rates concentrated in the following states: Indiana, 7.3%; Illinois, 6.2%; Alabama, 6%; Oklahoma, also 6%; and Ohio, 5.8%. As a percentage of preforeclosure properties in metropolitan areas, the ratio was highest in Wichita, Kansas at 12.1%; followed by Peoria, Illinois, 11.8%; Toledo, Ohio, 10.2%; Cedar Rapids, Iowa, also 10.2%; and Cleveland, 10%.Attom only tracks MSAs with at least 100,000 homes.How federal, state policy could impact zombie foreclosuresZombie foreclosures and blight are something one Trump administration official, federal housing regulator Bill Pulte, has experience with and could be concerned about given its role in the crisis that forced his charges into government conservatorship.Pulte has pledged to avoid a recurrence of such a crisis. But given that the influential mortgage buyers he oversees have relatively low levels of distressed mortgages, and broader vacant-home rates are still contained, it might not be his first priority.Rules around zombie properties could be something Pulte is likely to primarily hand off to the states, which typically mandate some distinct foreclosure practices. Such a move would be in line with a Trump administration that has been largely focused on deregulatory efforts.Pulte signaled earlier through a post on social media that he is rolling back a policy instituted during the Biden administration aimed at increasing owner-occupant competition with investors for distressed mortgage sales due to operational and financial concerns.

As banks continue to invest in artificial intelligence software — at the end of last year, 40% of respondents in an American Banker survey said they planned to increase AI spending in 2025 — the question arises, are they seeing a return on this investment yet?In a follow-up American Banker survey released in May, we asked bankers what gets in the way of realizing a positive return on their AI investments. They said the cost of modernizing their core systems and IT infrastructure, the higher pay needed to hire people with AI-related skills, rising data governance and management costs and increasing vendor prices.Here's a closer look at these four hurdles to AI benefits, and how bankers can overcome them.The cost of modernizing core technologyFor just about half (49%) of respondents, the cost of upgrading their core system is the primary impediment to getting a return on AI.Many banks have older core systems, in some cases decades old. These systems are written in programming languages like COBOL that young engineers don't know. It's not easy to feed data from them straight into AI models. And often these older systems operate in batch mode, so real-time data feeds are not possible.At the same time, upgrading any major system is expensive and comes with risk. For instance, in 2022, VyStar Credit Union in Jacksonville, Florida, rolled out a new online banking system from Nymbus that suffered weekslong outages, with some features unavailable for more than six months. Last year, the Consumer Financial Protection Bureau ordered VyStar to reimburse any fees customers encountered during the outage and to pay a $1.5 million civil penalty to the CFPB's victims' relief fund. "For banks that are thinking strategically, AI is going to be an accelerant" to core modernization projects, Celent analyst Alenka Grealish told American Banker. "It has to be, because they realize that the AI flywheel spins fast, and modernization is a first turn of the industrial flywheel. It's really hard. It takes a lot of investment with not as much return, until you get to the full turn, then they can start spinning."Banks that get 12 to 18 months ahead could potentially stay ahead, she said. "It's a sustainable competitive advantage for banks, because they have to be very cautious and careful when they use third party models or build their own models," she said. "They have to make sure there is explainability, no bias and that everything is done in an ethical manner."The need for modern cores has to do with the ability to access and extract the data needed to run AI solutions, Brian Gibbons, principal at EY, told American Banker. Some banks have been working to modernize their underlying data infrastructure so they can access, extract and integrate data from core platforms into AI models, he said. "I think those companies have a head start and an advantage," Gibbons said. "Companies that are just getting into that now are realizing that a huge amount of their AI investment has to actually go into modernizing their data platforms and environments."Michael Abbott, global banking lead at Accenture, pointed out that deploying AI doesn't always depend on having a new core system. Some use cases, like summarizing customer calls into a call center or improving marketing communications based on behavior patterns, don't require a core system upgrade, he told American Banker.For many other use cases, a data management upgrade is needed more than a core overhaul, he said."We are seeing an influx of people looking to modernize their core," he said. "But it's not AI driven. It's more regulatory and compliance driven, and end-of-life systems driven."The high cost of AI talentA third (33%) of surveyed bankers said the high cost of hiring people with AI skills gets in the way of seeing a return on their AI investments. Across the 50 banks tracked by research firm Evident, the AI talent stack has grown 12.6% over the last six months, the firm said in its 2025 AI Talent Report. "There is a war for talent, for sure," Gibbons said. "With advances in some of the tooling and capabilities, I think there is opportunity on the horizon where the high cost for data science and engineering workers may subside a bit. But I think there are not a lot of human beings who can really do that end-to-end design work and consider that end-to-end design in the context of regulations, in the context of cybersecurity needs, in the context of the governance, both data governance, model governance, etc."Some banks are taking data and tech savvy executives from other areas with deep institutional knowledge and putting them in charge of AI, Gibbons said.In Abbott's view, banks need to help employees gain the needed AI skills."What I'm seeing more and more is a lot of banks putting in training, hackathons, things where people in any function, whether they be in a mortgage group or risk group or compliance group or legal group, where they're encouraging innovation in that group, encouraging people to put their fingers on the keyboard and learn how it might change the way they're working," he said.Grealish said that with more employees using AI to help them with their jobs, the workforce will shrink overall. "The future of work is attrition that will not be replenished to the same degree," she said. "That's just the natural evolution when a technology matures and can replace humans. So while it's like, whoa, look at the price tag, I think it's more a mental shift that the average compensation is going to go up and we're going to have some prices on skilled labor that is close to a VP that owns a certain line of business product."Some bankers are looking for the ultimate hybrid, she said: "somebody who understands business, product, customers and who knows some engineer speak." Data governanceAmong the surveyed bankers, 33% said rising data governance and data management costs are preventing them from getting a return on their AI investments.Most banks are product-centric, and have data organized by products rather than by customers, Abbott said. "Very few banks can tie a customer's products together with their channel experiences and touch points," he said. "Banks want to have a digital memory of one, whereas, right now, unfortunately, they have a digital memory of all their products. And that's where they struggle." They also need permissions and rights to use customer data in AI models, he pointed out.Grealish said banks are just starting to do data governance. "Before, data just sat in a database," she said. "It wasn't asked to perform in an AI predictive model, or a gen AI employee-facing assistant that wants to integrate all the documents on some complex product, and all of a sudden, AI can't read the PDF even, because there's images and other things that aren't translatable. So I think it's more an awakening of, oh, we have to spend more here to get up to speed."AI necessitates application programming interfaces, cleansed data, and data governance and explainability, she noted."That does require this long journey for many banks, to go from legacy core data that's not really consumable by models because it was meant just to record a transaction to data that's dynamic and can feed into models to refine them so they can perform better in a banking context," Grealish said. Gibbons sees a trend of companies deciding that rather than feed their data to AI models, they will partner with core enterprise software providers who are embedding AI in their platforms, "and it effectively allows you to bring AI to where your data already is," he said. An example would be migrating to a customer relationship management software program with AI capabilities.Vendors' prices going upIncreasing prices from vendors is another perceived obstacle to getting a return on AI. About 18% of respondents worry about elevated prices from AI model providers, 17% say rising prices from app providers are the problem and 11% cited increasing prices from cloud providers.Grealish pointed out that over the past two decades, banks have moved from a fixed cost infrastructure to software as a service and cloud computing. "All of a sudden, what had been an advantage, if you were at scale, was you built and owned these big pipes," she said. "When you move to a variable cost structure, there's not a big upfront cost, but you're not going to get that nonlinear scaling."However, she believes competition among SaaS and cloud providers is bound to drive prices down, and then banks will be able to get lower unit costs as their volumes increase.

Andrew Harrer/Bloomberg Federal Reserve Chair Jerome Powell met with President Donald Trump at the White House on Thursday to discuss the economic outlook and monetary policy.During the meeting, Powell did not discuss his outlook for the federal funds rate, according to a statement issued by the Fed on Thursday afternoon. Instead, the central bank chief pledged to ensure the next policy adjustment is made free of political considerations."Chair Powell did not discuss his expectations for monetary policy, except to stress that the path of policy will depend entirely on incoming economic information and what that means for the outlook," according to the statement, adding that Powell and the rest of the Federal Open Market Committee "will set monetary policy, as required by law, to support maximum employment and stable prices and will make those decisions based solely on careful, objective, and non-political analysis."The Fed said Trump invited Powell to the White House and the conversation centered on economic growth, employment and inflation.The meeting comes as a growing number of Trump administration officials have begun calling on the Fed to lower interest rates. Earlier this week, Federal Housing Finance Agency Director Bill Pulte called on Powell to begin easing monetary policy."President Trump has crushed Biden's inflation, and there is no reason not to lower rates," Pulte posted on X.com, the site formerly known as Twitter. "The housing market would be in much better shape if Chairman Powell does this."Trump has been vocal about his own desire for the Fed to lower its benchmark interest rate, even going so far to label the Fed chairman "Too Late" Powell for not acting more swiftly to adjust policy and calling for his "termination." The president has since walked back those threats, saying he has "no intention" of firing Powell. Trump and Powell have had a tumultuous relationship dating back to Trump's first stint at the White House. After tapping Powell to be chair in 2018, Trump soon grew frustrated with the Fed's effort to raise interest rates and shrink its balance sheet. The public attacks continued after Trump's failed reelection bid and have ramped up since his campaign victory last fall. The tension between the two has raised questions about the degree to which the central bank and White House have communicated with one another since January. During his post-Federal Open Market Committee meeting press conference earlier this month, Powell was asked why he had not yet requested to meet with Trump."I've never asked for a meeting with any president, and I never will. I wouldn't do that. There's never a reason for me to ask for a meeting. It's always been the other way," Powell said. "I don't think it's up to a Fed chair to seek a meeting with the president. Although maybe some have done so, I've never done so. I can't imagine myself doing that. I think it always comes the other way, the president wants to meet. That hasn't happened."Trump's repeated calls for policy adjustments and his musings about removing Powell from office have raised questions about the Fed's independence from the executive branch. Powell has repeatedly said that the Fed is accountable only to Congress and that he could not be fired without cause. A recent ruling by the Supreme Court about the ability for the president to remove appointees at independent agencies said the Fed is insulated from executive firings. "The Federal Reserve is a uniquely structured, quasi-private entity that follows in the distinct historical tradition of the First and Second Banks of the United States," the court said in its decision.