Here are three of the week’s top pieces of financial insight, gathered from around the web:
Market crash yields refinance boom
“A sharp drop in mortgage interest rates has sparked a sudden and unexpected refinance boom,” said Diana Olick at CNBC. A flight to the safest federal bonds has sent interest rates on 10-year Treasury bonds to record lows, and mortgage rates have plummeted with them. This week, average mortgage rates “hit 3.11 percent,” and borrowers have descended on mortgage lenders to take advantage. Bank of America told one caller there was “a two-hour wait to speak with a loan officer.” Some lenders have expanded hours and hired staff to try to meet a demand running at three times the usual volume. “It’s absolute pandemonium,” said one sales officer at Cross Country Mortgage in Boca Raton, Florida. “Let’s put it this way: We are like Home Depot during a hurricane.”
New tax breaks for retirees
More states are looking at tax incentives to stem the “gray migration,” said Sandra Block at Kiplinger. As more retirees move away from high-tax states like New York and California to locations where there are no state income taxes, such as Florida and Nevada, some lawmakers are fighting back. Maryland, for instance, has “introduced legislation that would eliminate state taxes on the first $50,000 of income for retirees making up to $100,000 in federally adjusted gross income,” while those making $50,000 or less would pay no state tax. Similarly, Illinois recently “signed legislation making it easier for seniors in Cook County — which includes Chicago — to apply for a property tax break of up to $8,000 a year.” Lawmakers in New Mexico are also considering “several bills that would repeal or reduce taxes on Social Security.”
Hiding fees for financial advice
A popular website for finding financial planners will no longer disclose how much planners make in commissions or fees, said Jason Zweig at The Wall Street Journal. LetsMakeAPlan.org has “long served as a shortcut” for investors looking for a financial planner. It helps that it is run by the Certified Financial Planner Board, “a nonprofit that has awarded the CFP designation to more than 86,000 planners.” However, more than half of all planners charge commissions on sales when you trade a stock, bond, or fund — a system than can encourage excess trading. By contrast, fee-only advisers only charge a one-time or recurring fee. Now, “to learn how a planner gets paid, you will have to ask.”
This article was first published in the latest issue of The Week magazine. If you want to read more like it, try the magazine for a month here.