CHM Blog

Recent survey shows American military among the most optimistic homebuyers for 2023

Just because so much of the rest of the home-buying public is in an interest rate and high price funk doesn’t mean those who defend us are in there with them. According to Forbes’ Senior Contributor Brenda Richardson, a recent survey shows that many military members and veterans are optimistic about buying a home.

According to a study conducted by Veterans United Home Loans, nearly three-quarters of current service members (71%) plan to buy a home in the next five years. “Even with the rocky rate and affordability outlook, three in 10 current service members and 15% of veterans plan to buy in 2023,” says Richardson. “More than half of current service members anticipate buying a home in the next two to three years, especially Reserve and National Guard members.”

Veterans United’s Chris Birk adds, “After facing significant headwinds over the last year, veterans and service members are poised to rebound in 2023 as the market starts to shift back toward home buyers. For younger veterans and service members, the VA loan benefit means they don’t face the same hurdles that keep many civilian counterparts out of the housing market, chiefly the need for a down payment and great credit. Younger buyers have led the way in VA lending in recent years, and that storyline will continue through next year and beyond.” He goes on to say that veteran home buyers are buoyed by additional savings starting this summer after a temporary hike in the VA funding fee sunsets in April, saving them a collective $200 million a year.

Of the various branches of the armed services, Reserves and National Guard members are the most optimistic about buying in the next year (43%) compared with active duty members at 20% and veterans at 15%. The survey also reveals that almost 70% of active duty military members surveyed are renting or live in base housing with only 29% owning homes, versus 61% of Guard/Reserve and 58% of veterans that are homeowners.

Of course, the ability to buy without a down payment is the top reason veterans choose a VA loan, followed by competitive interest rates and limits on closing costs and fees. Those living close to military bases are among the most knowledgeable about VA home loans, while awareness diminishes the farther one travels from active-duty facilities. Those who are not aware of their eligibility tend to pay more money out of pocket. Another finding is that nearly half of service members and veterans who have not dealt with VA loans believe that other loan options may be more affordable and easier to use. About a quarter of them are unaware of their benefit or didn’t think they would qualify.

The month of April is when the VA funding fee is scheduled to decrease, which will also help with overall mortgage payments. Richardson says affordability is top-of-mind for prospective home buyers and this change will significantly help this group of buyers, especially first-time buyers entering the market.

She also adds that as monthly mortgage payments rose for home buyers in 2022, there was an increase in government lending, while conventional lending declined, according to data from Black Knight. Government lending is opening up doors to homeownership for those that may be priced out of conventional product offerings.

About 62% of service members and veterans say zero down payment is the top reason for using their VA home loan benefit. Veterans have a better understanding of the advantages of using the benefit as compared to active duty members. Unfortunately, misconceptions about the VA loan persist.

Forbes, TBWS

How Rates Move:

Conventional and Government (FHA and VA) lenders set their rates based on the pricing of Mortgage-Backed Securities (MBS) which are traded in real time, all day in the bond market.  This means rates or loan fees (mortgage pricing) moves throughout the day, being affected by a variety of economic or political events.  When MBS pricing goes up, mortgage rates or pricing generally goes down.  When they fall, mortgage pricing goes up.  Tracking these securities real-time is critical.  For more information about the rate market, contact me directly.  I’m among few mortgage professionals who have access to live trading screens during market hours.

Rates Currently Trending: Neutral

Mortgage rates are moving sideways today. The MBS market improved by +33 bps last week. This was enough to decrease mortgage rates or fees. The market experienced moderate volatility last week.

This Week's Rate Forecast: Neutral

Three Things: These are the three areas that have the greatest ability to impact rates this week. 1) The Fed, 2) Central Banks, and 3) Jobs.

1) The Fed: We will get the FOMC's Interest Rate Decision and Policy Statement on Wednesday. The markets largely expect a rate hike of only 25BPS but the door is open for more. The key is their message, if they keep hammering that the Fed's key interest rate will be in the "5s" before pausing, then we have one or two more 25BPS hikes. We will have a live presser with Fed Chair Powell right after their policy statement release.

2) Central Banks: Our Fed is not the only game in town. This week we will also get rate hikes out of the Bank of England (50BPS) and the ECB (50BPS).

3) Jobs: We have a ton of job and wage related data this week culminating in Big Jobs Friday. This week we get: Employment Cost Index, Jolts, ADP Payrolls, Challenger Job Cuts, Initial Weekly Jobless Claims, Unit Labor Costs, Average Hourly Earnings, Average Weekly Hours, Non Farm Payrolls, Unemployment Rate, U6 Underemployment Rate and the Participation Rate.

This Week's Potential Volatility: High

This morning markets are treading water. Volatility is moderate to start but will spike on FOMC and labor data.

Bottom Line:

If you are looking for the risks and benefits of locking your interest rate in today or floating your loan rate, contact your mortgage professional to discuss it with them.

Richard Sardella has been actively managing and providing services in the mortgage industry for over 30 years. Richard serves on the board of directors as President of Colorado Home Mortgages Inc.

All information furnished has been forwarded to you and is provided by thetbwsgroup only for informational purposes. Forecasting shall be considered as events which may be expected but not guaranteed. Neither the forwarding party and/or company nor thetbwsgroup assume any responsibility to any person who relies on information or forecasting contained in this report and disclaims all liability in respect to decisions or actions, or lack thereof based on any or all of the contents of this report.

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