Mortgage Rates

The 30-year fixed-rate mortgage averaged 4.94% in the Nov.15 week, unchanged during the week. The 15-year fixed-rate mortgage averaged 4.36%, up three basis points. The 5-year Treasury-indexed hybrid adjustable-rate mortgage averaged 4.14%, also unchanged.

8 year high.

A Muni Offering

In the news …

Security Description: VISALIA CA UNIF SCH DIST COPS UNDERLYING S&P A+

Rating: AA(S&P)
Insurance Desc: AGM
Interest Rate: 4.00%

Maturity: 5/1/2040
Call Features: 5/1/2021 @ 100
Yield to Call: 3.285%
Yield to Maturity: 3.864%

Price: 102

Interest rates

“The 30-year fixed-rate mortgage averaged 4.04% during the week ending Jan. 18, Freddie Mac said Thursday, up from 3.99% in the prior week. The 15-year fixed-rate mortgage averaged 3.49%, also up five basis points. The 5-year Treasury-indexed hybrid adjustable-rate mortgage averaged 3.46%, unchanged during the week.”

Munis Bonds

FMSBonds says:

“As uncertainty continues to surround the ever-changing tax overhaul plan, municipal bond issuers aren’t taking any chances: They’re conducting a gusher of bond sales at a pace not seen in more than 30 years.

Issuance this week is expected to total almost $12 billion, according to Thomson Reuters, following two weeks that each saw $20 billion in sales.

At the current rate, state and local governments are on track to easily exceed the monthly record of $54.7 billion in bond sales reached in 1985.”

Proposed tax code changes

Allowed individual deductions and credits

House Bill

  • Charitable contributions
  • Interest on new mortgages up to $500,000
  • Property taxes up to $10,000
  • Child tax credit of $1,600 for each child
  • Tax credit for expenses of adopting a child
  • Family tax credit of $300 for each parent and non-child dependent
  • Child and dependent care tax credit
  • Earned income tax credit for low- and moderate-income workers

Senate bill

  • Charitable contributions
  • Interest on new mortgages up to $1 million
  • Medical expenses
  • Student loan interest
  • Uninsured losses from federally declared disasters
  • Child tax credit of $1,650 for each child
  • Tax credit for expenses of adopting a child
  • Child and dependent care tax credit
  • Earned income tax credit for low- and moderate-income workers

Muni bonds and recent storms

“Early signs indicate bond insurers can withstand the recent hurricanes Harvey and Irma with no change in credit ratings, while Maria’s impact may be moot.

Although insurers are still tallying the costs, S&P Global Ratings said Assured Guaranty, Build America Mutual and National Public Finance Guarantee aren’t at risk for a ratings downgrade as a result of Harvey and Irma.” — FMS Bonds

Single issue risk

We have said it before, but worth repeating especially when investors have been practically forced into risky instruments by ZIRP.

“Seadrill Ltd., the London-based offshore driller controlled by billionaire Norwegian shipping magnate John Fredriksen, filed bankruptcy protection in the Southern District of Texas after working out a deal with most of its senior lenders to inject $1 billion of new money into the company pursuant to a pre-arranged plan of reorganization.”

ISM

The Institute for Supply Management (ISM) said its manufacturing index in August climbed to 58.8% from 56.3% in July. The highest reading since April 2011.