Financial News Friday – July 19, 2013

The City of Detroit has officially declared bankruptcy. (NY Times)

Due to a new initiative passed by lawmakers, new undergraduate loans taken out after July 1st of this year will pay interest rates of just 3.86%. Over the next few years, interest rates will rise on new loans by about 0.7% each year until reaching 7% in 2017. Graduate loans are also being given a reprieve in rates, albeit with higher starting interest rates. (CNN Money)

The large year-over-year increases in housing prices have caused home flippers to begin flipping houses once again in a major way. House flipping is up 74% since 2011. (Yahoo Finance)

The Federal Housing Administration is set to create a more restrictive process to apply for a reverse-mortgage. Stricter controls will likely be better for the balance sheets of both borrowers and lenders. (NY Times)

Interesting concept, the new social borrowing site, Upstart, connects young entrepreneurs with accredited investors. The investors, known as backers, provide the entrepreneur with a loan and are entitled to around 7% of the entrepreneur’s income each year for the next 10 years. A dubious proposition in my eyes, but I’m sure there will be willing participants on both sides of the trade. (NY Times)

An analysis by Bankrate.com indicates that baby boomers will have to be more careful with their retirement planning than previous generations. Chris Kahn from Bankrate.com states “Baby boomers are going to work longer than they’d originally expected. They’re going to have to save more than they’d planned. And they’re going to have to consume more modestly in retirement” (InvestmentNews)

Additionally I’ve updated the Jackson National Perspective II Variable Annuity Review to reflect the changes the company has made to the product. The update includes a new video, which really delves deep into how the income rider works.