California Mortgage Report: October 5, 2017

Published on October 5, 2017

– 4 min read

What’s going on: Rates tick up, stocks rally, tax reform on the horizon

  1. Rates: After holding steady all week, the market took a turn this morning. The prediction for a December Federal Reserve interest rate hike was reinforced, and the chances of this happening increased from 72.3% a week ago to 86.7% today.
  2. Stocks: The stock market is still holding strong, accelerating into new record highs. As reported by MarketWatch, the Dow Jones Industrial Average DJIA, +0.42% rose 90 points. The S&P 500 index SPX, +0.50% rose 12 points 2,549. The Nasdaq Composite Index COMP, +0.59% was up 36 points, or 0.6%, to 6,570. All three indexes traded at or near intraday records.
  3. Tax Reform: The House just passed a new budget resolution this morning, and this would be the first concrete step toward a much-anticipated tax reforms. In related news, California AB 71 is still on the table, which would eliminate tax deductions for second homes in California. The law would not apply to rental or investment properties.

What does this mean: More rises expected, bull market, more housing for CA

  1. Rates: With Federal Reserve interest rates poised to increase, mortgage interest rates may also increase.
  2. Stocks: The rise of the stock market suggests that investors have more confidence in the Trump Administration’s ability to pass tax reform.
  3. Tax Reform: The House just passed a new budget resolution this morning in the first concrete step toward much-anticipated tax reforms. Part of this plan includes California AB71, which would eliminate tax deductions for second homes in California (i.e., homes where Californians spend a significant amount of time). The elimination of tax deductions on second homes could be a source of funding to help pay for affordable housing, curbing California’s housing crisis.

Why should you care: This could be your Carpe Diem moment

  1. Rates: Now could be the best time to lock in a low mortgage interest rate for years. Mortgage rates are only somewhat higher than their all-time lows in November 2012.
  2. Stocks: Is now the time to cash in on stock market gains, taking advantage of the opportunity to buy a second home, or pick up an investment property to diversity assets?
  3. Tax Reform: Eliminating tax deductions on second homes could help first time buyers get into the market through an increase in the supply of available housing.



If you’re curious what your rates might look like with Clara, it only takes 3 minutes and a little information to get a quote.

Jack Rong
Jack Rong works in Capital Markets and Investor Relations at Clara with prior experience managing agency mortgage portfolios at Barclays. When he isn’t thinking about mortgage math, he enjoys playing basketball and volunteering at the Boys and Girls Club.
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