CURRENT EVENTS
Interest Rates:
Rates have risen moderately from their all-time lows, making for relatively increased reward for floating at the expense of greater risks of loss. Rates could easily move higher or lower, and unscheduled, unexpected events can ultimately have the most say in the direction.
Rentals:
Tenants in rental buildings that are in foreclosure now have more protection. The law requires that banks, receivers, and other entities that take control of a foreclosed residential property cannot terminate a valid lease until the end of the lease term. Then, whoever is in control of the property must provide at least ninety days written notice to the tenant. However, a person who acquires property and intends to make it his or her primary residence can terminate an existing lease with ninety days notice.
Ban of Cell Phone Use While Driving:
It doesn’t just apply to certain cities anymore! Starting January 1, 2014, Illinois motorists could face $75 fine if they are caught using their cell phone without a hands-free device. The new law also increases penalties in cases where the use of an electronic device while driving is the cause of the accident.
Keep a Hard Copy of Your Insurance Card in Your Car:
Make sure you keep your actual insurance card with you at all times while driving… having a picture of it on your phone won’t work! Governor Quinn vetoed House Bill 3139 which was a proposal to allow drivers to provide insurance cards through their smart phones.
Now You Can Drive a Little Faster:
Governor Quinn recently approved legislation that will raise the speed limit on rural interstates to 70 mph (from 65 mph) in order to keep the speed limit consistent with surrounding states. It’s not yet certain which areas this new speed limit will cover. Under the new law, Cook, DuPage, Kane, Lake, McHenry and Will are able to opt out of the new legislation and keep their maximum speed limit under 70 mph if they so choose Federal Reserve sets January taper date
Immediately following the conclusion of their December meeting, Federal Reserve officials announced the central bank will begin to taper its stimulus spending by $10 billion per month. For borrowers who have been enjoying a low rate mortgage, the news will likely impact mortgage rates next year.
Under its current rate, the Fed is purchasing $85 billion in U.S. Treasury bonds per month in an effort to keep interest rates low and encourage economic growth. Since the economy has shown major signs of improvement, including the November employment report, Fed officials believe it will soon be able to sustain growth on its own going forward.
Economic improvement:
Stimulus spending, known as quantitative easing, will be reduced to $75 billion per month beginning the first month of 2014. Fed officials have previously stated they would not begin to reduce spending until unemployment reached 6.5 percent or lower and inflation was above 2 percent. While neither of those goals have been met, there are signs the economy will meet them next year.
According to the November jobs report released by the Department of Labor, the unemployment rate dropped to 7 percent, down from 7.3 percent from the previous month. Additionally, 204,000 non-farm payroll jobs were added to the economy, a sign of progress Fed officials were hoping to see. Many economists are pleased by the decision, as the rate of spending by the Fed is unsustainable in the long run and has kept mortgage rates artificially low.
"I think it logically, this is what they had to do," David Kelly, JP Morgan Funds' managing director, told CNBC. "If you look at what's happened this year, the unemployment rate has come down to 7 percent. We've got housing starts over a million units. We got the S&P 500 up 25 percent. In this economy, you have to pull back from the most extreme monetary policy in a century. So I think it's overdue. I'm glad to see it."
Mortgage rates:
One effect of the taper will be on borrowers. Mortgage rates are likely to rise as the Fed decreases its bond-buying, with some economists guessing the rate for a 30-year fixed mortgage will rise above 5 percent. This time a year ago, interest rates averaged 3.36 percent. However, as the housing market has improved significantly over the last year, with home prices and sales growing quickly, borrowers will likely be able to absorb higher interest rates.
Rising rates may in fact be a good sign for the overall economy, proving that it is strong enough to handle them. Certainly, Fed officials believe the economy will be strong enough to stand on its own very soon. The January reduction in stimulus spending is merely the first step.
"The Fed is finally signifying to us the economy is doing better," Bob Doll, Nuveen Asset Management chief equity strategist, told CNBC. "2014, the economy will be a bit stronger, a bit broader and this is just confirmation of it."
Rates have risen moderately from their all-time lows, making for relatively increased reward for floating at the expense of greater risks of loss. Rates could easily move higher or lower, and unscheduled, unexpected events can ultimately have the most say in the direction.
Rentals:
Tenants in rental buildings that are in foreclosure now have more protection. The law requires that banks, receivers, and other entities that take control of a foreclosed residential property cannot terminate a valid lease until the end of the lease term. Then, whoever is in control of the property must provide at least ninety days written notice to the tenant. However, a person who acquires property and intends to make it his or her primary residence can terminate an existing lease with ninety days notice.
Ban of Cell Phone Use While Driving:
It doesn’t just apply to certain cities anymore! Starting January 1, 2014, Illinois motorists could face $75 fine if they are caught using their cell phone without a hands-free device. The new law also increases penalties in cases where the use of an electronic device while driving is the cause of the accident.
Keep a Hard Copy of Your Insurance Card in Your Car:
Make sure you keep your actual insurance card with you at all times while driving… having a picture of it on your phone won’t work! Governor Quinn vetoed House Bill 3139 which was a proposal to allow drivers to provide insurance cards through their smart phones.
Now You Can Drive a Little Faster:
Governor Quinn recently approved legislation that will raise the speed limit on rural interstates to 70 mph (from 65 mph) in order to keep the speed limit consistent with surrounding states. It’s not yet certain which areas this new speed limit will cover. Under the new law, Cook, DuPage, Kane, Lake, McHenry and Will are able to opt out of the new legislation and keep their maximum speed limit under 70 mph if they so choose Federal Reserve sets January taper date
Immediately following the conclusion of their December meeting, Federal Reserve officials announced the central bank will begin to taper its stimulus spending by $10 billion per month. For borrowers who have been enjoying a low rate mortgage, the news will likely impact mortgage rates next year.
Under its current rate, the Fed is purchasing $85 billion in U.S. Treasury bonds per month in an effort to keep interest rates low and encourage economic growth. Since the economy has shown major signs of improvement, including the November employment report, Fed officials believe it will soon be able to sustain growth on its own going forward.
Economic improvement:
Stimulus spending, known as quantitative easing, will be reduced to $75 billion per month beginning the first month of 2014. Fed officials have previously stated they would not begin to reduce spending until unemployment reached 6.5 percent or lower and inflation was above 2 percent. While neither of those goals have been met, there are signs the economy will meet them next year.
According to the November jobs report released by the Department of Labor, the unemployment rate dropped to 7 percent, down from 7.3 percent from the previous month. Additionally, 204,000 non-farm payroll jobs were added to the economy, a sign of progress Fed officials were hoping to see. Many economists are pleased by the decision, as the rate of spending by the Fed is unsustainable in the long run and has kept mortgage rates artificially low.
"I think it logically, this is what they had to do," David Kelly, JP Morgan Funds' managing director, told CNBC. "If you look at what's happened this year, the unemployment rate has come down to 7 percent. We've got housing starts over a million units. We got the S&P 500 up 25 percent. In this economy, you have to pull back from the most extreme monetary policy in a century. So I think it's overdue. I'm glad to see it."
Mortgage rates:
One effect of the taper will be on borrowers. Mortgage rates are likely to rise as the Fed decreases its bond-buying, with some economists guessing the rate for a 30-year fixed mortgage will rise above 5 percent. This time a year ago, interest rates averaged 3.36 percent. However, as the housing market has improved significantly over the last year, with home prices and sales growing quickly, borrowers will likely be able to absorb higher interest rates.
Rising rates may in fact be a good sign for the overall economy, proving that it is strong enough to handle them. Certainly, Fed officials believe the economy will be strong enough to stand on its own very soon. The January reduction in stimulus spending is merely the first step.
"The Fed is finally signifying to us the economy is doing better," Bob Doll, Nuveen Asset Management chief equity strategist, told CNBC. "2014, the economy will be a bit stronger, a bit broader and this is just confirmation of it."
