3-2-1: When Will Mortgage Rates Go Down, TCJA Sunset, New Scam Tactics

3 TIPS FROM ME

1) Are you prepared for the Tax Cuts & Jobs Act (TCJA) sunset?

The Tax Cuts and Jobs Act (TCJA) of 2017 brought about significant changes to the United States tax system, impacting individuals, families, and businesses alike. However, it’s crucial to recognize that many of the provisions within the TCJA are expiring on December 31, 2025.

As we approach the sunset provisions of the TCJA, it’s essential to understand how these changes might affect you and to plan accordingly.

5 major tax laws that are expected to change in 2026

• Income Tax
• Deductions and tax credits
• Estate and gift tax exemptions
• Charitable gifting
• QBI Deduction

2) When will mortgage rates come down?

If you bought a house in the past year, your mortgage rate will likely be above 6%. Right now, rates are closer to 7%. Some recent homebuyers chose an adjustable mortgage rate to get a lower rate, hoping to refinance if/when mortgage rates come down. But when is that going to happen?

To answer this, let's look into the two main factors that affect mortgage rates.

• 10-year Treasury bond: Mortgage rates have historically been about 2 percentage points above the 10-year Treasury bond. So, if the 10-year Treasury bond is at 4%, mortgage rates should be around 6%. But right now, the 30-year fixed is at 7%, and the gap is more like 3%. Economists are debating as to the cause of this higher-than-normal spread.
• Demand for mortgage-backed securities: Your mortgage is typically chopped and sold to investors through mortgage-backed securities. Demand for these mortgage-backed securities has been low for years, helping push up mortgage rates to entice investors to buy. Demand is low as the Federal Reserve has stopped buying them, and private investors are also staying away.So, when will mortgage rates start coming down? When:
• Private investors start buying more mortgage-backed securities,
• Interest rate falls, and interest rate uncertainty falls.

3) Beware of scams: Don't answer calls from an unknown number.

No one is immune to a scam these days. They've gotten more sophisticated and can launch psychological warfare on us. A financial advice columnist from the New York Magazine recently wrote about how she fell for a $50,000 scam.

"Amazon" called her, saying there were suspicious transactions in her account. "Did you buy thousands of dollars worth of iPads & MacBooks?" She didn't. "Looks like you've been a victim of identity theft. We've had a lot of those lately. Can I transfer you to a liaison with the Federal Trade Commission?" Sure, she said.

It wasn't really Amazon, but she didn't know that.

Lessons I took away from this article:

• Don't answer your phone if you don't recognize the number.
• If you do answer the phone & the phone number matches the official number, still don't trust the identity of the caller. If they claim to be your credit card provider, hang up and just call your credit card provider directly.
• Assume thieves know your SSN, DOB, address, and family member names. If someone knows this information, that doesn't mean they're legit.
• Tell someone you trust about what's happening.
• Call 911 if you are being threatened.

2 QUOTES FROM OTHERS

1) “In the short run, the market is a voting machine but in the long run, it is a weighing machine.” - Benjamin Graham

2) “I never attempt to make money on the stock market. I buy on the assumption that they could close the market the next day and not reopen it for five years.” - Warren Buffett

1 QUESTION FOR YOU

Until next time,

Alvin

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