White House and New Tax Reform Plans, Mortgage rates edged higher in latest week, Purchase of existing homes declines in March
April 27, 2017
The White House unveiled its new tax reform plans on Wednesday, which is expected to usher in a rise in economic growth. The Trump tax plan calls for tax rates on businesses large and small to be slashed to 15% from 35%, while the number of income tax brackets will shrink from seven to three (10%, 25%, 35%). The estate tax and alternative minimum tax would be eliminated. The standard deduction, currently $6,350 for single people and $12,700 for married couples, would double, and would eliminate most itemized deductions. Mortgage interest, charitable contributions and retirement savings would also be left in place.
Mortgage rates edged higher in the latest week, but still remain just above all-time lows. Freddie Mac reported that the 30-year fixed mortgage rate rose to 4.03% in the latest week from 3.97% the previous week with 0.5 in points and fees. Mortgage rates continue to remain low, due to low inflation and weak economic growth. In addition, the U.S. Federal Reserve continues to purchase Mortgage Backed Securities in the open markets, which has a lowering effect on mortgage rates.
The National Association of Realtors® (NAR) reported on Thursday that signed contracts to purchase existing homes declined in March from February due in part to a lack of supply. Pending Home Sales fell 0.8% in March from February to 111.4. Despite the lack of inventory, activity was still strong enough to be the third best in the past year, reports the NAR. “Home shoppers are coming out in droves this spring and competing with each other for the meager amount of listings in the affordable price range,” said Lawrence Yun, NAR chief economist.