|With millions of college students returning to campus this month, student debt and their housing options after graduation are in focus.
Some 45 million people in the United States carry student debt. Almost a fifth owe more than $100,000, according to the National Association of Realtors.
People’s monthly student loan payments can eat up a large slice of their income, threaten to push down their credit scores and make saving nearly impossible — all huge impediments, of course, to landing in a house.
Eighty-three percent of people ages 22 to 35 with student debt who haven’t bought a house yet blame their educational loans, according to the NAR. And while 86 percent of millennials believe that buying a house is a good financial investment, only 15 percent have a mortgage today, according to information services company Experian.
Almost one-fifth of people with student debt who apply for a mortgage are denied because of their “debt-to-income ratio,” which is what a person owes versus how much they make, according to the NAR.
The median income for student loan borrowers is $59,746, according to analysts at the Harvard joint center. For borrowers under 30, the average monthly loan payment is $351, according to Student Loan Hero.
What Happened to Rates Last Week?
|Mortgage backed securities (FNMA 4.50 MBS) gained +13 basis points (BPS) from last Friday’s close which caused fixed mortgage rates to move slightly lower for the week.
Overview: The bond market (specifically Mortgage Backed Securities) continued to trade below our 100 day moving average which has been an extremely strong technical resistance level. Overall, the message from the Fed last week, was that tax reform and lower regulations have kept our economy growing and will warrant continued and gradual rate hikes. However, they are concerned about the unknown trade war duration and impact on the economy.
The Talking Fed:
Kansas City Fed President Esther George (non voting member) said she sees two more hikes this year. “Based on what I see today, I think two more rate hikes could be appropriate.”
St. Louis Fed President James Bullard (non voting member) has a more dovish bias and said “If it was just me I’d stand pat where we are and I’d try to react to data as it comes in.”
We got the Minutes from the last FOMC meeting. Really, there were no surprises there. They certainly made it clear that there would be a rate hike at the next meeting but will see how trade issues impact their growth projections before pushing for a 4th hike this year. They discussed that they would have to drop the “remains accommodative” phrase soon after a couple more rate hikes.
Trade Snore: China and the U.S. concluded their round of meetings in D.C. with no deal, but that was expected as they are on a “road map” to setting things up for a meeting with Presidents Xi and Trump in the fall
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.