Your Major Could Determine How Much House You Can Afford:
Is your major at the top of this list?
It’s the classic college-age query: “What’s your major?” But maybe the real question should be: What kind of house do you want to live in?
Here’s a nonshocker: Not all college majors are created equal, especially when you consider those four years of tuition as an investment in future earnings. A few years down the road, when you’re ready to settle down and purchase a home, your specific college concentration may very well have a lot to do with how much you can afford.
This, it turns out, is very good news for engineers. But it’s not so great, sadly, for horticulturists.
Despite the controversy around rising tuition and student debt that make some doubt whether a college degree is still worth it, a 2014 analysis by the Federal Reserve Bank of New York shows the average value of a college degree has remained near its all-time high since 1970.
According to PayScale, a midcareer employee with a bachelor’s degree earns a median salary of $77,006, meaning he or she can afford a house costing up to $341,000. That’s about 60% more than a high school graduate.
Out of all 300-plus majors, petroleum engineering came out on top: With a midcareer salary of $168,000, these grads can afford to buy as high as $744,000, more than three times the national median list price. Even those fresh out of college land impressive starting salaries of $101,000. Unsurprisingly, other engineering branches (e.g., chemical engineering, computer science engineering) are also more likely to earn six-figure salaries with a few years’ experience.
At the bottom of the list: liberal arts and education majors. Early-childhood education brings up the rear with a midcareer salary of $38,000—barely enough to buy a house priced at $168,000 (not even the national median). Social work, another popular major for an awfully good cause, is also among the lowest paid, with a midcareer salary of just $45,700.
Don’t be too discouraged, however! Those numbers don’t factor in geographic differences. Teaching jobs are up for grabs all over the country, but engineering positions are concentrated in a few technology hubs where the booming economy has driven housing prices up significantly.
What Happened to Rates Last Week?
|Mortgage backed securities (FNMA 3.50 MBS) lost -34 basis points (BPS) from last Friday’s close which caused fixed mortgage rates to move sideways to slightly higher as we traded in a very narrow range.The breadth of the weekly channel for MBS trades was very tight. Overall, the majority of the domestic economic data was positive and it would have taken a “perfect storm” of very weaker economic data and new and or heightened global fear for MBS to have mounted any type of rally and we simply didn’t get that “perfect storm” so MBS values retreated from our very strong overhead technical resistance for some small losses compared to the prior week.
Trapped until the Fed. The First MBS trade in September was at 103.59 and the close (last trade) fromFriday was 103.64 that means MBS have netted out only 5BPS so far this month. Now, that is sideways movement!
Inflation?: The Producer Price Index (PPI) was a little stronger than expected with the Headline MOM reading flat at 0.0% vs est of -0.1% to -0.2%. The Core PPI data was also higher than expected +0.3% vs est of +0.1%. YOY the data did make some gains but are well below the Fed’s “target” rate of 2%. While this is not the only inflationary gauge that the Fed looks at, it is something that could impact their on going rate hike discussions.
Consumer Sentiment: The preliminary reading for September was weaker than expected with a reading of 85.7 vs est of 91.0. While this number will be revised one more time (usually the second release is higher than the first release), this is still a disappointment.
Wholesale Inventories: The July Reading gives us our first look at the 3rd QTR and it was much weaker than expected with a reading of -0.1% vs est of +0.3%.
Treasury Auctions: We had two big auctions that hit last week with our 10 year note and more importantly, our 30 year bond auctions. Both had similar results. They both saw a very nice spike in demand (as measured by the bid-to-cover ratios). However, that increased interest in our debt came at a price where we had to pay a higher interest rate than during our last auctions.
|What to Watch Out For This Week:
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.The above are the major economic reports that will hit the market this week. They each have the ability to affect the pricing of Mortgage Backed Securities and therefore, interest rates for Government and Conventional mortgages. I will be watching these reports closely for you and let you know if there are any big surprises.