Friday Financial Five – November 21st, 2014

Friday, November 21, 2014

Dan Forbes, an Forbes, GoLocal24 MINDSETTER™

An October housing surge

Home buying fence-sitters may view this as the last opportunity to lock in a four percent mortgage. October saw home sales rise at their fastest pace in more than a year. According to the Mortgage Bankers Association, mortgage applications and the appetite for higher prices homes also increased last month. There’s a traditional slowdown entering the winter months as families don’t want to brave the cold or interrupt the start of school. The combination of Federal Reserve sentiment and a strengthening economy may have buyers thinking this is the last chance for historically low rates.

Fed looks out for inflation dip

As for the Federal Reserve, inflationary expectations are indeed a top priority, according to a review of last month’s minutes. The committee members cite improvements in the labor market, unemployment and increased consumer and business spending, but note that inflation is still under the two percent long term goal. That could be cause for concern, as much as consumers like the idea of the prices remaining stable. In the Fed’s determination, 2 percent is the proper long term projection, with current lower inflation influenced by the decrease in energy prices.

Consumers feeling good

Consumer sentiment is at its highest since January 2008, sometimes an indication that it may be a reason to batten down the hatches. This calculation comes courtesy of the Bloomberg Consumer Comfort Index. The index creators cite stock market advances, lower payments at the gas pumps, and the upcoming holiday season as playing a big role. Income is also a factor, as those making $50,000 or more saw their highest index score since July 2013, while the calculation for those making below $50,000 declined to a five-week low.

Solar power continues to get more affordable

A Kiplinger’s report details the important issues for evaluating a conversion to solar powered energy. The cost of a system is getting lower as competition increases, but it will still take quite a few years to recoup the initial outlay. A federal tax credit through 2016 allows a deduction for 30 percent of the cost for buying and installing the system, and there may be other rebates or incentives available through individual states.

Bank of America clears another hurdle

It might be tough to see a silver lining when paying almost $17 billion in fines, but Bank of America did get some relatively good news from the SEC this week. After being fined last week by the OCC on a separate matter, SEC commissioners waived sanctions that, as part of the settlement with the Department of Justice, would have prevented the bank from managing mutual funds. Bank of America also received a partial waiver for the business they conduct with hedge fund clients. Getting these matters resolved with the SEC should pave the way for the institution to complete the multi-billion settlement it agreed to in August of this year.

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].