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Mortgage rates dip slightly as Americans rush to refinance their home loans

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Mortgage rates are flirting with another record low — and that means the boom in refinancing has not yet finished.

The 30-year fixed-rate mortgage averaged 2.87% for the week ending Oct. 8, down one basis point from the week prior, Freddie Mac
FMCC,
-0.25%

reported Thursday. A few weeks ago, the average rate for the 30-year loan fell to an all-time low of 2.86%.

The 15-year fixed-rate mortgage rose by a basis point to an average of 2.37%, while the 5-year Treasury-indexed hybrid adjustable-rate mortgage dropped one basis point to 2.89% on average.

Mortgage rates usually roughly follow the direction of the 10-year Treasury note’s yield
TMUBMUSD10Y,
0.771%
,
which trended upward this week. That’s not what happened this week, though.

“Typically, Treasury yields and mortgage rates have a close relationship, with a movement in the former usually dictating a change to the latter,” said Matthew Speakman, an economist with Zillow
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-0.73%
.
“However, the pandemic has frayed this relationship, and mortgage rates remain much higher than you would expect them to be.”


‘The year-long slide in mortgage rates seems to be ending.’


— Sam Khater, Freddie Mac’s chief economist

That mortgage rates remained roughly flat despite a week in which investors fled to the safety of bonds amid President Trump’s COVID-19 diagnosis and concerns about the state of the economic recovery from the pandemic suggests that even lower rates may not come to fruition.

“The year-long slide in mortgage rates seems to be ending as rates have flattened over the last month and the economic rebound has slowed,” Sam Khater, Freddie Mac’s chief economist, said in the report.

Nevertheless, homeowners continue to seek out refinancing opportunities in droves. Refinancing activity remains 50% higher than a year ago, according to the latest mortgage application index from the Mortgage Bankers Association. Low rates have pushed refinancing to the highest level since mid-August.

But signs are emerging that ultra-low interest rates are no longer motivation enough for buyers, as home prices continue to increase at a fast clip across much of the country. While the number of applications for mortgages used to buy homes was 21% higher than a year ago, it was down on a weekly basis.

Plus, credit remains hard to come by as lenders are giving loans only to the most creditworthy borrowers.

“Historically-low mortgage rates are no longer offsetting higher prices, causing affordability challenges to take center stage in a market dominated by younger millennial buyers,” said George Ratiu, senior economist at Realtor.com.



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S.E.C. Commissioner Hester Peirce on the outlook for crypto regulation, and whether this will finally be the year we see a Bitcoin ETF.





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My husband doesn’t get along with my son. I brought most of the wealth into our marriage. How do I split my estate?

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Dear Quentin,

How do couples typically handle their estates in a second marriage? My husband and I have been married for seven years, and it is the second marriage for both of us. I have one adult child from my previous marriage; he has no children.

I brought the majority of our wealth to our marriage, including almost $1 million in my 401(k) and a nice home that is almost paid off; otherwise, we have no debt. My husband and I bought a second home together. We work hard to fund our new 401(k)s, and own a successful business together.

I am turning 65 this year, so estate planning is long overdue. My husband is five years younger than me, and we are both in very good health. We have two issues facing us: I see our retirement as living very comfortably on the monthly income generated by our 401(k)s, pension, Social Security, etc., and leaving whatever may be left to my son.


‘The other issue is that my husband no longer gets along with my dear son at all, and feels no obligation to get along with him.’

I am not interested in scrimping, but I want to be able to have enough money to last us until age 90 (or beyond) by not touching the principal. My husband is more interested in dipping deep into our savings, and living it up in retirement while we are young enough to enjoy it.

The other issue is that my husband no longer gets along with my dear son at all, and feels no obligation to get along with him, to the point that neither one wants anything to do with the other. As far as he is concerned, my son doesn’t meet his expectations, and so deserves nothing from me and certainly nothing from him.

I want my estate planning to be fair to both my new husband and my son. How do people typically handle this type of quandary? I think that I need to create some type of trust to pass on my share of our estate to my son. My pre-marriage assets involved my son as I pursued my graduate degree through night school and worked long hours throughout his childhood.

Second Wife

You can email The Moneyist with any financial and ethical questions related to coronavirus at qfottrell@marketwatch.com.

Dear Second Wife,

Don’t allow your husband’s feelings toward your son to influence your estate planning.

Your relationships with your husband and your son and your own plans for retirement are all fair game when making decisions about your estate, but your husband and son’s fractured relationship is their business, not yours. You worked hard for this money, and your son is your legal heir. Any effort by your husband to spend all of your savings and fritter away any inheritance that you intended to leave to your son should be resisted at all costs.

You have worked too hard your entire life to compromise your plans for a comfortable retirement where you have money set aside for long-term medical care insurance, unforeseen emergencies and/or your son. If you jointly own your home, you can leave your half to your son in your will, and specify it can only be sold after your husband passes away.

If you own the home, you can give your husband a life estate. Your son would pay capital-gains tax on the value of your home when he sells it, and not when you bought it. You could also make your son the beneficiary on your life-insurance policy, and/or gift him a certain amount of money per year to see how he manages and spends that money.

Figure out what is fair to yourself first before moving on to what is fair to your husband and your son. It’s OK to put your needs first. I caution against your dipping into savings at a rate that is beyond your own risk tolerance.

Ultimately, you are entitled to leave all other separate property to your son when you die — and, along with a financial adviser, set up a trust with that in mind for you, your husband and your son. Not necessarily in that order.

The Moneyist: ‘I cut his hair because he won’t pay for a haircut’: My multimillionaire husband is 90. I’ve looked after him for 41 years, but he won’t help my son

Hello there, MarketWatchers. Check out the Moneyist private Facebook
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 group, where we look for answers to life’s thorniest money issues. Readers write in to me with all sorts of dilemmas. Post your questions, tell me what you want to know more about, or weigh in on the latest Moneyist columns.

By submitting your story to Dow Jones & Company, the publisher of MarketWatch, you understand and agree that we may use your story, or versions of it, in all media and platforms, including via third parties.



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These money and investing tips can help you make a place for crypto in your portfolio

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Don’t miss these top money and investing features:

These money and investing stories, popular with MarketWatch readers over the past week, can give you a better understanding of bitcoin and other cyrptocurrency, and help you figure out if digital currency has a place in your portfolio alongside stocks, bonds and other traditional assets.

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