Millennials Key To Next Wave of Purchases
Just 36% of Americans under the age of 35 own a home, according to the Census Bureau. That’s down from 42% in 2007 and the lowest level since 1982, when the agency began tracking homeownership by age.
It’s not all their fault. Millennials want to buy homes — 90% prefer owning over renting, according to a recent survey from Fannie Mae.
But student loan debt, tight lending standards and stiff competition have made it next to impossible for many of these younger Americans to make the leap.
“When we surveyed Millennials they cited several barriers to homeownership, especially access to financing,” said Steve Deggendorf, a senior director for Fannie Mae. Many Millennials simply can’t come up with the hefty 20% down payments. Others don’t have good enough credit to qualify for loans.
There is a ray of hope for young wanna be homeowners, said Fannie Mae’s Deggendorf. “Mortgage lending is getting a little less tight, with lenders approving buyers with a little lower credit score and who have less of a downpayment,” he said.
Mortgage backed securities (MBS) gained +30 basis points (BPS) from last Friday’s close which caused 30 year fixed mortgage rates to move to higher for the week. We saw our best rateson Thursday and our worst rates on Monday.
We had a very light week for economic data with the focus on the release of the minutes from the last FOMC meeting which appeared to show that the Fed was leaning towards ending their massive asset purchase program of U.S. Treasuries and agency mortgage backed securities in October.
But the main reason for the improvement in rates is the flight to safety into U.S. bonds.
Overseas Woes: (bad for them…good for our bonds)
Europe: Very disappointing French (-1.7%, Exp. 0.2%, Last 0.3%), Italian (-1.2%, Exp. 0.2%, Last 0.5%) and Dutch (-1.9%, Exp. 0.3%, Last 2.3%) industrial Production data, raising concerns about a European recovery.
China: Exports trailed estimates in June, suggesting support for growth from global demand will be limited as leaders try to defend their economic-expansion goal of about 7.5% this year.
Japan: Machinery orders fell the most on record in May, suggesting that companies remain cautious about deploying record cash reserves into investment.
Israel: Mobilized 20,000 soldiers for a possible ground invasion of the Gaza Strip, as militants there extended their rocket barrage and the Palestinian death toll climbed to at least 75 as Israel continued with their 3rd day of air strikes. Hamas has shot off over 200 rockets in the last day into Israel.
Ukraine: Donetsk is steeling itself for a siege as troops encircle separatists who’ve pulled back to the biggest city in Ukraine’s conflict zone after months of bloody unrest.
Portugal: Portugal’s 10Y yield +22bps amid concern over problems at the nation’s second largest bank as it is most likely insolvent and was one of the largest purchasers of Portugal’s bonds.
What to Watch Out For This Week:
Date Time (ET) Economic Release Actual Market Expects Prior 15-Jul 8:30 AM Retail Sales – 0.70% 0.30% 15-Jul 8:30 AM Retail Sales ex-auto – 0.60% 0.10% 15-Jul 8:30 AM Empire Manufacturing – 13.2 19.3 15-Jul 8:30 AM Export Prices ex-ag. – NA 0.10% 15-Jul 8:30 AM Import Prices ex-oil – NA 0.00% 15-Jul 10:00 AM Business Inventories – 0.60% 0.60% 16-Jul 7:00 AM MBA Mortgage Index – NA 1.90% 16-Jul 8:30 AM PPI – 0.20% -0.20% 16-Jul 8:30 AM Core PPI – 0.20% -0.10% 16-Jul 9:00 AM Net Long-Term TIC Flows – NA -$24.2B 16-Jul 9:15 AM Industrial Production – 0.40% 0.60% 16-Jul 9:15 AM Capacity Utilization – 79.20% 79.10% 16-Jul 10:00 AM NAHB Housing Market Index – 50 49 16-Jul 10:30 AM Crude Inventories – NA -2.370M 16-Jul 2:00 PM Fed’s Beige Book – – – 17-Jul 8:30 AM Initial Claims – 311K 304K 17-Jul 8:30 AM Continuing Claims – 2563K 2584K 17-Jul 8:30 AM Housing Starts – 1020K 1001K 17-Jul 8:30 AM Building Permits – 1037K 991K 17-Jul 10:00 AM Philadelphia Fed – 12.5 17.8 17-Jul 10:30 AM Natural Gas Inventories – NA 93 bcf 18-Jul 9:55 AM Mich Sentiment – 84 82.5 18-Jul 10:00 AM Leading Indicators – 0.50% 0.50%
I will be watching these reports closely for you and let you know if there are any big surprises: It is virtually impossible for you to keep track of what is going on with the economy and other events that can impact the housing and mortgage markets. Just leave it to me, I monitor the live trading of Mortgage Backed Securities which are the only thing government and conventional mortgage rates are based upon.