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Friday Financial Five – March 14th, 2014

Friday, March 14, 2014

 

Britain anticipates rapid interest rate increase

Britain’s economy has become the envy of the developed world, with anticipated growth of over 3 percent in the first half of 2014. The Governor of the Bank of England forecasts an increase to rates by as much as six times the current rate in the next three years. This increase would benefit savers, while also assuredly motivating homebuyers to purchase real estate sooner rather than later. Those holding variable rate loans will try to lock in a lower fixed rate. It’s an enviable state of affairs, but one that the U.S. can’t hope to replicate until growth expands and employment stabilizes.

Social Security options may be limited

Social Security’s viability rests on the government’s ability to properly manage inflows and outflows. The inflows are more or less predictable based on the workforce and wages, but the outflows can fluctuate depending on retirees’ choices of when to receive benefits. People, as they often do, will attempt to maximize income to the extent possible. With that in mind, part of the recent 2015 budget proposal intends to eliminate “aggressive Social Security claiming strategies”. It isn’t clear exactly what options are being targeted, but it stands to reason that higher income retirees and spousal benefits are under the microscope. This leads to another question as to what changes can be made with or without the approval of Congress.

Fannie and Freddie get hit hard

Congress did Fannie Mae and Freddie Mac stockholders no favors this week. Shares are off big following Tuesday’s announcement by the Senate Banking Committee that they intend to phase the mortgage lenders out. There is no timeline for the changes and a vote isn’t even expected this year. However, there is a firm commitment by Congress to remove government from the mortgage business as much as possible. The current proposal would create a Federal Mortgage Insurance Corp, an oversight body modeled after the FDIC.

Higher deductibles a definite trend

The trend toward higher deductible health plans has been confirmed in a new study by Mercer LLC. Roughly 80 percent of companies have made a change to their health plan or are considering making a shift. This includes many that have concerns that “Cadillac Plans” may result in a hefty tax for what are considered overly generous benefits. Workers that have moved to higher deductible plans must keep an eye out for any co-pays after the deductible is met. This can lead to yearly out-of-pocket expenses much greater than the actual plan deductible.

Payday loan practices under CFPB scrutiny

The Consumer Financial Protection Bureau continues active involvement in the practice of “payday loans”. These loans involve borrowers taking out small loans against the promise of repayment when a future paycheck arrives. The loans have high interest rates and detractors fear the practice places low income borrowers in a never-ending cycle of debt. At the end of 2013, the CFPB recovered $14 million from Cash America International. Now, companies that use or sell internet data to connect lenders and borrowers are under the microscope. Expect some future settlements.

 

Dan Forbes is a regular contributor on financial issues. He is a CFP Board Ambassador. He leads the firm Forbes Financial Planning, Inc in Providence, RI and can be reached at [email protected].

 

Related Slideshow: 10 Great RI Houses That Just Came on the Market—March 13, 2014

Prev Next

Coventry

226 Shady Valley Rd

3 beds, 2 baths

$299,00

Pristine,move-in ready,1-level, energy efficient home,just steps from access to Johnson's Pond!Gleaming hardwoods,open floor plan,sunny solarium. Established gardens and tranquil surroundings.Enjoy your own piece of paradise-yet minutes from 95!

Days on the market: 2

To see more of this property, go here.

Prev Next

Glocester

86 Aldrich Rd.

6 beds, 3 baths

$499,900

Incredible views on Waterman Lake, private beach & boat ramp! Possible in-law or guest apartment. Granite kitchen, 4 beds, 2.5 baths, hardwoods & fireplaced living room.

Days on the market: 3

To see more of this property, go here.

Prev Next

Cumberland

49 Lilac St.

4 beds, 3 baths

$299,000

Young brick front colonial with 4 beds and 3 full baths! Beautiful gourmet kitchen! Hardwoods! C air! C vaccum! Granite and much more! Pride of ownership! A must see! Garage!

Days on the market: 3

To see more of this property, go here.

Prev Next

Pawtucket

226 Woodhaven Rd.

2 beds, 1 bath

$169,900

Darlington delightful updated 2 bed 1.5 bath cape on a quiet corner boasts lr/fp den eat-in kitchen opening to formal dining / corner cupboards roomy beds on second hardwoods gas heat rec rm 3 season porch sprinklers garage private fenced yard.

Days on the market: 3

To see more of this property, go here.

Prev Next

Narragansett

85 Saybrook Ave.

3 beds, 2 baths

$339,900

Bright & open 3 bedroom home situated on a large private lot. Only 10 years young. Home features great space for entertainment, master w/bath, fenced yard, garage, gleaming hardwoods, deck overlooking private yard or a short walk to beach.

Days on the market: 3

To see more of this property, go here.

Prev Next

Middletown

1 Acacia Dr.

4 beds, 2 baths

$429,000

Well-maintained, spacious home in quiet neighborhood setting. Newer roof and septic system. Features include 2 fireplaces, a paneled family room and hardwood floors. Deck overlooks a large yard perfect for family activities and gardening.

Days on the market: 3

To see more of this property, go here.

Prev Next

Westerly

8 Clark St.

2 beds, 3 baths

$219,000

Ideal for entertaining. Pool, hot tub, fire pit and patio. Open spaces, kitchen with double ovens, large master bedroom w/bath, 2 fireplaces. Possible in-law. Walking to marinas and downtown Westerly and park.

Days on the market: 7

To see more of this property, go here.

Prev Next

Charlestown

78 Midland Rd.

2 beds, 2 baths

$525,000

Cute BEACH cottage in the heart of QUONNIE/EAST BEACH. Short walk to beautiful, private East Beach. Enjoy boating, swimming, fishing & all amenities that Quonnie East Beach Assoc. offers. Partially finished walkout in lower level, 1 car garage.

Days on the market: 7

To see more of this property, go here.

Prev Next

Cumberland

9 Kings Row

4 beds, 3 baths

$595,000

Exclusive Custom Built, one owner Home located on a quiet street in Arnold Mills-Close to MA Line. You couldn't build this quality of construction for this price!!! Open floor plan, nice private yard, sprinklers, optional master on the 1st and MORE

Days on the market: 9

To see more of this property, go here.

Prev Next

Tiverton

281 Riverside Dr.

3 beds, 1 bath

$474,000

Waterfront - Sakonnet River! ALL NEW! Totally Renovated! Hardwoods. New, New, New - Kitchen, Stainless Appliances, Bath, Roof, Siding, Windows, Foundation, Piers, Electric, Radiant Heating, Instant Hot Water, Icynene Insulation, Paint, and much more!

Days on the market: 9

To see more of this property, go here.

 
 

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