Mortgage Rates Drop Lower in Early 2019

The new year started with lower mortgage rates across the board in the U.S. The 30-year fixed mortgage rate recently dipped to 4.51%. The low mortgage rate combined with decreasing home price growth should get prospective homebuyers excited to buy. However, the recent turmoil of the stock market may affect home buying activity in the next few months. The 30 year mortgage fixed-rate averaged 4.51% for the week ending January 3, 2019, down from last week when it averaged 4.55%. A year ago at this time, the 30 year fixed-rate mortgage averaged 3.95%. The 15 year fixed mortgage rate average 3.99% this week, down from last week when it averaged 4.01%.

This mortgage-rate drop offers a potential boost to the housing market. The decline on mortgage rates gives consumers an opportunity to obtain low rates on loans to purchase or refinance their homes, if they can look past volatile financial markets and still high home values. High home prices, stock market swings, and a traditionally slow time of year for home buying have largely lowered housing-market activity in recent months.

Short-Term Rentals Will Get Hotel Tax Treatment Under Newly Enacted Massachusetts Law

Under a newly enacted Massachusetts law, short-term rentals in Massachusetts will soon be taxed at the same rate as hotels. Massachusetts governor Charlie Baker signed a bill into law in late December aimed at regulating short-term rentals. This new measure goes into effect July 1st, and requires all hosts to register with the state, carry insurance, and taxes them at the same 5.7% short-term rental tax that hotels currently pay. The new law is expected to bring in at least $25M annually for the state. However, hosts who rent their home fewer than 14 times annually are exempt from the tax. 

The most popular short-term rental website, Airbnb, is very unhappy with the decision and is already preparing to fight back. Airbnb Northeast Press Secretary Liz Debold recently released a statement expressing their disappointment in the "flawed bill" and stated that Airbnb will continue to fight for "hosts, guests, and local small businesses". Airbnb most recently filed a lawsuit in federal court in November to overturn another Boston short-term rental law passed last summer which would have required hosts to register and a pay a $200 annual fee.

This new law will bring several large changes to Massachusetts, which encompasses several regions especially popular for short-term rentals. Cape Cod, the Berkshires, and Boston are specifically very profitable regions for Airbnb hosts. Under the new law, Boston is permitted to add on an additional 6.5% tax on short-term rentals. Massachusetts will be the first state requiring short-term rental hosts to register with the state. This law has serious benefits for the safety and security of consumers who stay in Airbnbs. Hotel industry groups were especially pushing for the required state registry and were happy with the new law. Lawmakers believe this law will create a more balanced playing field between short-term rentals and traditional hotels, leading towards a more fair and practical system.