INTEREST RATES TO REMAIN LOW UNTIL AT LEAST DECEMBER
There are only three meeting left this year for the Federal Open Market Committee, and the likelihood they’ll raise interest rates on home mortgages above current levels looks slim, judging by the latest minutes released Wednesday.
National Association of Federal Credit Unions Chief Economist Curt Long explained that the FOMC minutes continue to reflect divisions within the committee. “The constant refrain of ‘data dependency’ from Fed Chair Janet Yellen and other Fed officials loses its meaning when there is no consensus on what the data means, much less which policy course is warranted,” said Long.
Nevertheless, it seems safe to say that many of the committee’s fears were alleviated with the strong June jobs report and by Brexit’s lack of impact on financial markets,” he said. “With inflationary pressures yet to emerge, the Fed seems happy to play the waiting game as far as rate normalization is concerned.” Long concluded as a result, they “anticipate no rate hike until December or later.”
This also marks the traditional stance that rates do not get raised during the last few months of a Presidential race for the White House. Residents and potential homebuyers here in the Southern San Joaquin Valley can rest assured the extremely low mortgage interest rates in today housing market will continue for another three months.
So that means now, more than ever it is time to contact your local mortgage lender, your favorite Realtor and get prequalified for the home of your dreams.
Another major event which happened in the State Senate earlier this month was not so good for California homeowners with distressed properties. Senate Bill 907, authored by Senator Cathleen Gaigiani (D-Manteca) died in the Legislature. The bill would have extended through 2016 a tax break for millions of Californians with underwater homes. These homeowners, thousands here in Visalia, Tulare and Porterville, who negotiated a settlement with their lender to write down the loan, learned later that a canceled debt was what’s called “a taxable event.”
Congress had declared that loan write-downs, short sales and other forms of mortgage relief would be free of federal income taxes. The California Legislature and then Governor Arnold Schwarzengger followed suit for several years, extending relief through 2013.
However, when Jerry Brown returned to the governorship, facing and immense budget deficit, he refused to continue the tax exemption for any relief actions since 2013, last year vetoing a bill that would have added two years to the window.
The issue is expected to be brought up again soon in the state legislature as pressure mounts on elected officials, including Governor Brown.
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