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Bankrate: Mortgage Rates Retreat

Bankrate: Mortgage Rates Retreat

NEW YORK, Jan. 17, 2013, Mortgage rates moved lower after reaching a 4-month high last week, with the benchmark 30-year fixed mortgage rate retreating to 3.60 percent this week, according to Bankrate.com’s weekly national survey. The average 30-year fixed mortgage has an average of 0.36 discount and origination points.

To see mortgage rates in your area, go to http://www.bankrate.com/funnel/mortgages/.

The average 15-year fixed mortgage rate pulled back to 2.89 percent and the larger jumbo 30-year mortgage dropped to 4.04 percent. Adjustable rate mortgages were lower across the board, with the popular 5-year ARM sliding to 2.74 percent and the 7-year ARM sinking to 2.88 percent.

The glow of the fiscal cliff deal is beginning to wear off, with mortgage rates now sliding back after a run-up to start the year. Although recent economic data has been pretty positive, the pace of the decline in bond yields and mortgage rates will likely pick up as nervousness about the debt ceiling debate increases. Mortgage rates are closely related to yields on long-term government bonds.

The last time mortgage rates were above 5 percent was Apr. 2011. At the time, the average 30-year fixed rate was 5.07 percent, meaning a $200,000 loan would have carried a monthly payment of $1,082.22. With the average rate now 3.60 percent, the monthly payment for the same size loan would be $909.29, a difference of $173 per month for anyone refinancing now.

SURVEY RESULTS

30-year fixed: 3.60% — down from 3.67% last week (avg. points: 0.36)

15-year fixed: 2.89% — down from 2.92% last week (avg. points: 0.27)

5/1 ARM: 2.74% — down from 2.77% last week (avg. points: 0.31)

Bankrate’s national weekly mortgage survey is conducted each Wednesday from data provided by the top 10 banks and thrifts in the top 10 markets.

For a full analysis of this week’s move in mortgage rates, go to http://www.bankrate.com/mortgagerates.

The survey is complemented by Bankrate’s weekly Rate Trend Index, in which a panel of mortgage experts predicts which way the rates are headed over the next seven days. A little over half of respondents, 54 percent, expect mortgage rates to
remain more or less unchanged over the coming week. Slightly more than one-quarter – 27 percent – predict mortgage rates will decline and just 19 percent see mortgage rates rising over the next seven days.

For the full mortgage Rate Trend Index, go to http://www.bankrate.com/RTI.

About Bankrate, Inc. (NYSE: RATE)

The Bankrate network of companies includes Bankrate.com, Interest.com, Mortgage-calc.com, Nationwide Card Services, InsureMe, CreditCardGuide.com, Bankaholic, CreditCards.com and NetQuote. Each of these businesses helps consumers to make informed decisions about their personal finance matters. The company’s flagship brand, Bankrate.com is a destination site of personal finance channels, including banking, investing, taxes, debt management and college finance. Bankrate.com is the leading aggregator of rates and other information on more than 300 financial products, including mortgages, credit cards, new and used auto loans, money market accounts and CDs, checking and ATM fees, home equity loans and online banking fees. Bankrate.com reviews more than 4,800 financial institutions in 575 markets in 50 states. Bankrate.com provides financial applications and information to a network of more than 75 partners, including Yahoo! (Nasdaq: YHOO), America Online (NYSE: AOL), The Wall Street Journal and The New York Times (NYSE: NYT). Bankrate.com’s information is also distributed through more than 500 newspapers.

For more information contact:

Kayleen Yates
Senior Director, Corporate Communications
kyates@bankrate.com

(917) 368-8677

SOURCE: Bankrate, Inc.

RELATED LINKS: http://www.bankrate.com

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Personal Finance Retirement Savings

New Study on American Retirement Plans

New Study Shows That 1 In 4 Americans Will Tap Retirement Plans For Non-Retirement Needs

Cash-Outs, Loans, and Heavy Fees Take Heavy Toll on Nation’s Premier Retirement Savings Program

WASHINGTON, Jan. 16, 2013, New research released today by HelloWallet finds that over 25% of U.S. workers participating in a 401(k) plan will access their 401(k) savings before they reach retirement, now withdrawing $70 billion annually. The study, which analyzed consumer finance data from the Federal Reserve and the U.S. Census Bureau, raises significant questions about the future of the bedrock retirement program as more workers move from traditional pension benefits towards tax-incented defined contribution programs. The survey results also hold significant implications for employers, who collectively invest $118 billion annually in 401(k) programs for their workers’ retirement.

The research finds that one out of four participants in 401(k) retirement programs will either cash-out their savings before retirement – incurring substantial penalties and taxes – or forfeit them to loans. Among the other findings in the research:

 

  • 26 percent of 401(k) participants now use their 401(k) savings for non-retirement needs;
  • 75 percent report that they breached their savings because of basic money management problems;
  • Workers now withdraw or breach over $70 billion annually out of their 401(k)s for non-retirement needs;
  • Penalized withdrawals increased from $36 billion to about $60 billion between 2004 and 2010;
  • Workers in their 40’s are most likely to breach their savings for non-retirement needs.

“This research shows that employers are not getting the ROI that they may think they are from their retirement investments,” said HelloWallet founder and CEO Matt Fellowes , a former Brookings Scholar who led the study. “Investing in retirement savings is essential for all Americans, but this study demonstrates that a large share of U.S. workers lack the basic financial skills needed to actually benefit from those savings, and it’s costing both them and their employer dearly.”

“While there is no question about the need for retirement savings, the issue raised by our research is whether employees are given the financial tools, including unbiased guidance, to make the best decisions every step of the way,” said Fellowes. “These data strongly indicate that, for many workers, investment advice is misaligned with their investment needs and, as importantly, with their basic day-to-day financial needs.”

The research also finds that only a small percentage of employees (8 percent) are withdrawing funds because they have lost their jobs. Instead, 75 percent of those who have made early withdrawals have done so because they lack basic money management skills and need to meet basic money management challenges, such as emergencies, credit card payments, and health care. In many cases, better planning and guidance would put them on a track to avoid costly mistakes, take advantage of the tax incentives, and accumulate the savings needed for retirement.

For employers, the implications of the research are substantial. American companies now spend $118 billion annually on retirement contributions with the expectation that employees will take maximum advantage of these programs to improve their financial well-being. The new research suggests that employers’ massive investment is not always delivering the intended results.

To aid employers in evaluating the effectiveness of their retirement and other Rewards programs, HelloWallet is providing an online diagnostic. Called the “Financial Wellness Diagnostic,” this free tool provides employers with insight into the needs of their workforce to help them better align their benefits investments to meet that need.

To receive a complete copy of the study, click here.

About HelloWallet. HelloWallet is the leading provider of behavioral technology applications that help organizations improve their performance through aligning their Total Rewards spending with their human capital needs. HelloWallet is headquartered in Washington DC and is backed by Morningstar, Inc., TD Fund, Grotech Ventures, and Revolution LLC. For more information, please visit our website www.hellowallet.com or call 866.55.HELLO.

Contact:
Don Goldberg
don@bluetext.com
202-365-5224

SOURCE: HelloWallet

RELATED LINKS: http://www.hellowallet.com

 

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Business School Education Finance MBA Personal Finance

2013 Best Online Business Programs Announced

U.S. News & World Report Announces the 2013 Best Online Education Programs Rankings

Introduces Numerical Rankings for the First Time

WASHINGTON, Jan. 15, 2013,  U.S. News & World Report released today the second annual rankings edition of the Best Online Education Programs. For the first time, programs administered for distance learners that are 100 percent online will be ranked numerically, just like traditional colleges and graduate schools. Online bachelor’s degree programs as well as graduate online degree programs in business, engineering, nursing, education, and computer information technology were ranked. There will be no print component to the Best Online Education rankings; however, U.S. News plans to include highlights in both the Best Graduate Schools 2014 and Best Colleges 2014 printed guidebooks.

Online education allows people to attend school without having to quit their jobs or disrupt their lives. According to Georgetown University’s Center on Education and the Workforce, people with a bachelor’s degree earn 84 percent more than those with only a high school diploma in their lifetimes—making online education, with its flexibility, an increasingly popular option.

And U.S. News is responding with data and rankings to help people sort out the best options for them.

“Online education is becoming an essential part of higher education,” said U.S. News & World Report Editor and Chief Content Officer Brian Kelly . “Our goal has always been to provide our consumers with the most accurate information so that they may make their best decision. Incorporating online education rankings and data is the next step in providing our consumers with the information they need.”

Greatly improved participation from schools and data collection enabled U.S. News to rank online education programs numerically this year. Factors used to compute the rankings this year include retention rates, graduation rates, and the indebtedness of students upon graduation.

Another difference with this year’s rankings is that a small percentage of schools that were evaluated in 2012 were not evaluated for the 2013 edition. This was due to U.S. News converting to the new, federal government definition of distance education programs, meaning that degree-granting programs must offer 100 percent of their courses needed for the degree online.

Online bachelor’s degree programs were ranked in three different categories: student engagement, faculty credentials and training, and student services and technology. All of the online master’s degree programs were ranked in admissions selectivity in addition to the bachelor’s degree categories. The engineering and business master’s programs were also ranked based on ratings of their academic reputation by top academics who run online programs at peer institutions.

Data was collected from both for-profit and not-for-profit schools. There is no distinction between the two in the rankings. For more information about the rankings methodology, please go to www.usnews.com/onlinemeth.

For more information on the Best Online Education Programs rankings, please visit www.usnews.com/education/online-education or find us on Facebook or Twitter.

Best Online Education Program Rankings 2013
* For the full list of rankings, visit
www.usnews.com/education/online-education:

Best Bachelor’s Programs

Best Engineering Programs (Graduate)

1. Pace University (NY)

1. University of Southern California (Viterbi)

2. Daytona State College (FL)

2. Pennsylvania State University – World Campus

3. St. John’s University (NY)

3. Columbia University (Fu Foundation) (NY)

Best Business Programs (Graduate)

Best Nursing Programs (Graduate)

1. Washington State University

1. Ferris State University (MI)

2. Arizona State University (Carey)

2. Lamar University (TX)

3. Indiana University – Bloomington (Kelley)

3. University of Michigan – Flint

Best Education Programs (Graduate)

Best Computer Information Technology Programs (Graduate)

1. St. John’s University (NY)

1. University of Southern California (Viterbi)

2. Auburn University (AL)

2. Sam Houston State University (TX)

3. South Dakota State University

3. Virginia Tech

 

About U.S. News & World Report


U.S. News & World Report is a multi-platform, digital publisher of news and analysis, which includes the digital-only U.S. News Weekly magazine, www.usnews.com, and www.rankingsandreviews.com. Focusing on Health, Money, Education, Travel, Cars, and Public Service/Opinion, U.S. News has earned a reputation as the leading provider of service news and information that improves the quality of life of its readers. U.S. News & World Report‘s signature franchise includes its News You Can Use® brand of journalism and its “Best series of consumer guides that include rankings of colleges, graduate schools, hospitals, mutual funds, health plans, and more.

SOURCE: U.S. News & World Report

RELATED LINKS: http://www.usnews.com

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Banking Consumers Financial News Government Legal Loans Mortgages Personal Finance Real Estate

Consumer Financial Protection Bureau issues rules to strengthen protections for high-cost mortgages

Consumer Financial Protection Bureau issues rules to strengthen protections for high-cost mortgages

Bureau Also Expands Time Frame for Required Escrow Accounts

WASHINGTON, D.C., Jan. 10, 2013, Today the Consumer Financial Protection Bureau (CFPB) issued final rules to strengthen consumer protections for high-cost mortgages and to provide consumers with information about homeownership counseling. The Bureau also finalized a rule that requires escrow accounts be established for a minimum of five years for certain higher-priced mortgage loans.

“Addressing problems in the mortgage market is critical to helping our economy recover,” said CFPB Director Richard Cordray. “Today’s changes will better help consumers to understand the real costs of owning a home while protecting them from harmful practices that can trap them into high-cost mortgages.”

The Home Ownership and Equity Protection Act (HOEPA) was enacted in 1994 to address abuses in home-equity lending and refinances. Since then, HOEPA has deterred high-rate and high-fee lending in those markets. In recent years, high-cost mortgages have made up only about 0.2 percent of those types of loans.

The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) expanded HOEPA to cover home purchase loans and home equity lines of credit (“HELOCs”); revised HOEPA’s rate- and fee-thresholds for coverage; added a new coverage test based on a transaction’s prepayment penalties; and provided new limitations on risky loan features, as well as other new protections for high-cost mortgages. The CFPB has finalized rules to implement the Dodd-Frank Act’s amendments to HOEPA.

For loans that are high-cost mortgages, today’s final rule:

  • Bans potentially risky features: For mortgages that qualify as high-cost, the rule      generally bans balloon payments (a large, lump sum payment usually due at      the end of the loan) with some exceptions, such as for certain types of      loans made by creditors serving rural or underserved areas, and bans      penalties for paying the loan early.
  • Bans and limits certain fees and practices: The CFPB’s rule bans fees for modifying loans, caps      late fees at four percent of the payment that is past due, generally      prohibits closing costs from being rolled into the loan amount, and      restricts the charging of fees when consumers ask for a payoff statement      (a document that tells borrowers how much they need to pay off the loan).      The rule also prohibits certain bad practices, such as encouraging a      consumer to default on an existing loan to be refinanced by a high-cost      mortgage.
  • Requires housing counseling: The rule requires consumers to receive housing      counseling before taking out a high-cost mortgage.

In addition to strengthening the protections for high-cost mortgages, the Bureau today is implementing a requirement of the Dodd-Frank Act that lenders provide a list of homeownership counseling organizations to consumers shortly after they apply for a mortgage so consumers know where to get help when deciding what loan is best for them.

The Bureau is also implementing other changes made by the Dodd-Frank Act concerning escrow accounts. An escrow account is an account that a lender may set up to pay certain recurring property-related expenses on a consumer’s behalf, such as property taxes and homeowner’s insurance. Escrow accounts help to ensure that consumers have enough money to pay those bills when they come because the lender breaks the expenses down into monthly installments and adds them to the monthly mortgage payment. Through an escrow account, consumers can better see the true cost of owning a home with insurance and tax costs laid out with each mortgage payment and are better assured that those costs are paid in a timely manner.

Under current regulations, creditors are required to establish escrow accounts for certain higher-priced mortgage loans for a minimum of one year. Today’s final rule implements changes from the Dodd-Frank Act that generally extend the required duration of an escrow account on such mortgage loans from a minimum of one year to a minimum of five years. To preserve access to credit, the rule exempts loans made by certain creditors that operate predominantly in rural or underserved areas, as long as certain other criteria are met.

The rules will be available later today at: http://www.consumerfinance.gov/regulations

 

A consumer guide to the final HOEPA rule can be found at: http://files.consumerfinance.gov/f/201301_cfpb_high-cost-mortgage-rule_what-it-means-for-consumers.pdf

 

A consumer guide to the final Escrows rule can be found at: http://files.consumerfinance.gov/f/201301_cfpb_escrow-requirements-rule_what-it-means-for-consumers.pdf

Categories
Finance Personal Finance Polls Retirement

CIBC Poll: Majority of Canadian Retirees happy with retirement today – but worried about running out of money over the long term

CIBC Poll: Majority of Canadian Retirees happy with retirement today – but worried about running out of money over the long term

Some retirees vulnerable to short term financial shocks, and have long term concerns about making their money last

TORONTO, Jan. 14, 2013,  A new CIBC (TSX: CM) (NYSE: CM) poll conducted by Leger Marketing reveals that most of Canada’s retirees feel positive about their current finances in retirement, saying they are living the retirement they hoped for today. However, some retirees are concerned they won’t be able to sustain their lifestyle over the long term and worry that they will run out of money at a future date.

Key poll findings include:

  • 69 per cent of retired Canadians said they are currently living the retirement they hoped for.
  • However, 28 per cent said they are afraid of running out of money for their retirement over the longer term.
  • Regionally, retirees in Quebec and Manitoba and Saskatchewan were among the most likely to say they are currently living the retirement they planned for (74 per cent), while retirees in British Columbia were among the least likely (60 per cent).
  • British Columbia retirees were among the most likely (45 per cent) to say they are afraid of running out of money for their retirement, while Atlantic Canadians were among the least likely (21 per cent)

“While it is positive to see that a majority of retired Canadians are living the retirement they hoped for, our poll findings also show there is concern around whether their retirement savings will sustain them in the years to come,” said Christina Kramer , Executive Vice President, Retail Distribution and Channel Strategy, CIBC. There are some unique factors facing today’s retirees as they look to the years ahead, including low interest rates on savings and the need to make their retirement funds last longer than previous generations, which makes long range planning even more important.”

Planning Doesn’t End With Retirement

While many Canadians focus on how much they need to save in order to reach retirement, it is just as important to focus on how you will convert your savings to income that will last throughout your retirement.

  • Only 62 per cent of retired Canadians say they have a plan to help them determine how long their savings will last and how much they can withdraw each year to support their lifestyle.
  • Among those with a plan, there was a even split in how they developed their plan – with 31 per cent saying they have a plan with an advisor and 31 per cent saying they have a plan they developed on their own.

“Having a plan you can be confident in can contribute to your peace of mind and allow you to enjoy your retirement with a clear view of how you will make your finances work over the long term,” noted Ms. Kramer. “Considering the number of factors retirees face today, a conversation with an advisor can help ensure all components of your retirement are accounted for.”

Ms. Kramer also noted that those doing their own planning would likely benefit from reviewing their plan with an advisor. “Even if you choose to do much of your own planning when it comes to your finances, an advisor can serve as a useful sounding board to check your assumptions and offer solutions you may not have considered.”

Retirees More Vulnerable to Financial Shocks

While the concerns of today’s retirees were primarily focused on the long term, poll results also show that more than half of retired Canadians indicate that a short term financial shock could create a challenge in managing cash flow:

  • Given their current income and cash flow, 54 per cent of retired Canadians said that taking on a new $500 monthly payment would be unmanageable
  • Within this group, 34 per cent said it would be very unmanageable and 19 per cent said it would be somewhat unmanageable

This suggests that some retired Canadians may not be financially prepared to pay for costs associated with an unexpected emergency – such as needing a new roof or replacing a car – which could add to their concerns about running out of money in the future.

“It’s important to plan for your long term retirement goals, but your plan should also include an emergency savings component,” said Ms. Kramer. “You may have to reevaluate how much you are able to withdraw each year to ensure you do have savings that could be used in the event of an emergency to avoid taking on a new monthly debt payment that can impact your lifestyle.”

Financial Advice for Retired Canadians

  • Meet with an Advisor to review your finances – You need to understand how much income you generate from your savings combined with your pension or income you continue to earn. This will help you determine what level of retirement expenses are appropriate for you and allows you to make changes to your retirement strategy today if required.
  • Minimize and eliminate debt – One of the most effective ways to make your retirement savings go further is to minimize or eliminate debt repayment in retirement. This reduces interest costs and increases cash flow.
  • Plan for tomorrow – today’s retirees’ are living longer, healthier lives. An advisor can help you develop a comprehensive plan that ensures you have the financial ability to live the retirement you hoped for throughout your retirement, regardless of any unexpected emergencies that may arise.

For Reference – Summary of Key Data

Percentage of retired Canadians that said they are currently living the retirement they hoped for, by region:

National Average

69%

BC

60%

Alberta

66%

Man/Sask

74%

Ontario

70%

Quebec

74%

Atlantic Canada

71%

Percentage of retired Canadians that said they are afraid of running out of money for their retirement, by region:

National Average

28%

BC

45%

Alberta

29%

Man/Sask

32%

Ontario

26%

Quebec

23%

Atlantic Canada

21%

Percentage of retired Canadians that given their income and cash flow, taking on a new $500 loan payment would be unmanageable, by region:

National Average

54%

BC

66%

Alberta

39%

Man/Sask

50%

Ontario

50%

Quebec

60%

Atlantic Canada

52%

Results are based on a CIBC poll conducted by Leger Marketing, via a Web survey. These data were gathered in a sample of 867 retired or pre-retired Canadians between September 18 and 21, 2012.

CIBC is a leading North American financial institution with nearly 11 million personal banking and business clients.

CIBC offers a full range of products and services through its comprehensive electronic banking network, branches and offices across Canada, and has offices in the United States and around the world. You can find other news releases and information about CIBC in our Press Centre on our corporate website at www.cibc.com.

SOURCE: CIBC