‘Mortgage Rates Surprise’ They Near 2017 Low!

tThe 30-year fixed-rate mortgage dropped lower for the third consecutive week and neared its low for 2017, Freddie Mac reports in its weekly mortgage market survey.

“After three straight weeks of declines, the 30-year mortgage rate is now barely above the 2017 low. Next week’s survey rate may be determined by Friday’s employment report and whether or not it can sustain the strength from earlier this year.” says Sean Becketti, Freddie Mac’s chief economist.

Freddie Mac reported the following national averages for the week ending April 6, 2017:

30-year fixed-rate mortgages: averaged 4.10 percent, with an average 0.5 point, falling from last week’s 4.14 percent average. Last year at this time, 30-year rates averaged 3.59 percent.
15-year fixed-rate mortgages: averaged 3.36 percent, with an average 0.5 point, dropping from last week’s 3.39 percent average. A year ago, 15-year rates averaged 2.88 percent.

Source: Freddie Mac

Study: Millennials Hold Off on Big Life Choices

Baby boomers and millennials have different attitudes when it comes to marriage, children, and home ownership. Researchers with the National Center for Family and Marriage Research at Bowling Green State University compared adults who were 25 to 34 years old in the 1980’s with those who are in that age group today. One difference they found is that millennials are getting married later in life. In 1980, two-thirds of 25- to 34-year-old’s were married; in 2015, just two in five were married.

Because baby boomers were more likely to get married younger, they generally left their parents’ home much earlier than millennials. Americans in their late 20s and early 30s who live with their parents or grandparents have more than doubled since 1980, notes researcher Lydia Anderson. In 1980, only 9 percent of 25- to 34-year-olds were living with parents or grandparents compared to 22 percent in 2015.

Millennials are also putting off having children and buying a home. Plus, lag behind baby boomers when it comes to marriage, children, and home ownership, they are more likely to obtain a college degree, the study notes.

Source: “Young Americans Are Killing Marriage,” Bloomberg (April 4, 2017)

Home Prices Blamed for Student Loan Defaults

The housing crisis may also have sparked the increase in student loan default rates, according to a working paper by the National Bureau of Economic Research.

The study says the drop in home prices during the Great Recession also coincided with a 24 to 32 percent rise in student loan default rates. Researchers looked at administrative student loan data along with ZIP code home price data for about 300,000 student loan borrowers in repayment.

Last year, more than 1 million federal student loan borrowers defaulted on their debt.

“The huge rise in student loan defaults is on everybody’s minds and the question is what’s the cause of this rise?” says Holger Mueller, one of the authors of the paper and a professor of finance at New York University’s Stern School of Business. “What we want to do is point to another very important source of default risk and that’s just the labor market.”

Source: “Why Lower Prices Lead to Higher Student Loan Default Rates,” MarketWatch (April 1, 2017)

Company Offers Workers a ‘Delocation’ Package

Companies commonly offer relocation packages for employees who must move for a job, but one firm is providing its workers a “delocation” package—in which they’ll pay employees to move anywhere.

Zapier, a company producing workflow automation tools, says it’s offering the package to new employees living in the San Francisco area in hopes of expanding into new markets in the near future. New employees can choose the city that best fits their needs, and the company will reimburse up to $10,000 in moving expenses incurred during the first three months of work.

“When we first started hiring, we simply hired the best people in our networks—which happened to be outside of Silicon Valley because we’re originally from the Midwest—and the remote aspect continued,” says Wade Foster, CEO of Zapier. The company now has 80-plus employees who all work remotely across 13 countries and 22 states, Foster says. “We found a business model that works for us and incentivizes the best talent to live and work anywhere in the world.”

Source: “This Company Will Pay You to Relocate Wherever You Want,” Forbes.com (April 2, 2017)

ARMs Rise in Popularity as Rates Increase

More borrowers are turning to shorter-term adjustable-rate mortgages as interest rates rise, but that may be a riskier move than your clients realize. While these mortgages offer lower interest rates, the rates reset after a certain preset time. Still, a five-year hybrid adjustable-rate mortgage averaged a 3.28 percent rate last week compared to 4.30 for the 30-year fixed-rate mortgage, according to Freddie Mac’s weekly mortgage market survey.

The share of ARMs in total mortgage application volume has doubled to 9 percent since November 2016. The highest level of ARM applications since October 2014. “Home buyers in a strong housing market are looking for ways to extend their purchasing power, and ARMs are one way to do that,” says Mike Fratantoni, chief economist for the Mortgage Bankers Association. “While the ARM share got as high as 35 percent pre-crisis, it is really unlikely it will get nearly as high now, given [new] regulations, which effectively prohibit many types of ARMs that were prevalent then.”

Source: “Mortgage Applications Fall 2.7%, as Borrowers Turn to Riskier Loans,” CNBC (March 22, 2017)

‘Energy Efficiency’ Weighted More in Appraisals

Energy efficiency scores will soon be included on appraisal forms in a handful of states. Builders are applauding the change, saying that will help give more credit for energy-saving features.

The Home Energy Rating System (HERS) Index is a numerical rating system that measures energy consumption compared to a standard house. The standard house has a score of 100. But a house that has a HERS index of 70, for example, would use 30 percent less energy. A home with a HERS index of 130, on the other hand, would consume 30 percent more energy. As such, the lower the HERS score, the lower the energy costs. The HERS score will be added to an existing green-building addendum that appraisers use.

More details at this source: “A Move Toward More Helpful Appraisals,” Greenbuildingadvisor.com (March 16, 2017)

 

Which Is the Best Home Security System?

Your clients may have questions about home security systems. If so, Reviews.com has compiled a thorough list of the best home security systems, based on studies and surveys entailing installation, customer reviews, costs, and reliability.

Review.com’s analysis recognized the following brands in the following categories:

Best for recognizability and professional installation: ADT
Best technology and mobile app: Vivint
Best for low upfront cost and initial phone call: Protect America
Best for customer service and businesses: Protection 1
Best for overall reputation, customization, and DIY installation: Frontpoint
Best for all-around value: Link Interactive
Best for flexibility and easiest barrier to entry: SimpliSafe

Source: “Best Home Security System,” Reviews.com (Feb. 1, 2017)

The Race Is On to Snag a Low Rate

Borrowers are getting spooked by rising rates and they’re rushing to lock in rates before any further increases. That’s pushing mortgage application volume higher, increasing a seasonally adjusted 3.3 percent week over week, the Mortgage Bankers Association report. Buyers are also increasingly turning to adjustable-rate mortgages to try to get more savings in their monthly payments too.

“Mortgage rates increased last week as remarks by several key Federal Reserve officials strongly signaled a March rate increase,” says Joel Kan, an MBA economist. “This was further supported by a few solid economic data releases, including GDP, inflation, and manufacturing gauges.”

The 30-year fixed-rate mortgage increased to 4.36 percent from 4.30 percent the previous week, the MBA reports.

Source: “Borrowers Rush to Beat Rising Rates, Pushing Mortgage Volume 3.3% Higher,” CNBC (March 8, 2017)

How Will Housing Fare In the Next Decade?

Housing demand over the next decade will be significantly higher than it is today, predicts Lawrence Yun, the chief economist of the National Association of REALTORS®, in his latest column at Forbes.com. Rising populations and a growth in the job market likely will release a pent-up demand in housing over the next 10 years, he says.

The ages you’ll need to watch for in the housing market over the next decade: those in their 30s and 40s. The population of people in their 30s is expected to grow by 5 million over the next decade, reaching 48 million. Yun says that 12 percent increase likely will lead to more first-time home buyers. Plus, the number of Americans in their 40s will increase by 3 million, and he predicts they’ll be looking to trade up in real estate.

Overall, Yun notes, “Within reasonable parameters of economic growth and interest rate movements, home sales should do well over the next decade, clocking in at around 6 million a year.” The ages we’ll need to watch for in the housing market over the next decade: those in their 30s and 40s. The population of people in their 30s is expected to grow by 5 million over the next decade, reaching 48 million. Or course, every region will vary, what’s predicted for your market?

Source: “Housing Demand Over the Next Decade,” Forbes.com (March 2, 2017)

 

Maybe Rethink That Retirement Age?

Workers over the age of 65 are staying active in the workforce, opting to push back retirement.

In the year 2000, about 13 percent of Americans 65 and over reported being employed full or part time. But, by May 2016, that percentage had increased to 18.8 percent. As such, nearly 9 million Americans who are age 65 and over are employed. Further, over the next five years, that percentage is expected to rise to 32 percent of the workforce.

However, workers still need to be practical and anticipate retiring one day, and you should plan for it.

Source: “Workers Are Working Longer—and Better,” The New York Times (March 2, 2017)