July 20th, 2021 9:15 AM by Richard Sardella MLO.100007700/NMLS 233568
According to Realtor Magazine, a record number of millennials wanted to buy homes in 2020 but the inventory shortages have increased all price points of the housing market, further delaying their entrance into homeownership.
Rewind a bit in time and recall that before the pandemic, millennials said they were struggling to save for a down payment due to lost savings from the financial crisis or they were burdened with student debt. The delay of marriage and family have also been linked to homeownership, and hardly anyone was (is) getting married.
Now that the offspring of the baby boomers and genXers are feeling more financially stable, millennials’ potential homeownership demand has climbed by 3.5 percentage points year over year—more than any other generation, according to a First American Title analysis.
The peak year of millennials turning age 30 was 2020 and the oldest turn 40 this year. Millennials make up the largest potential home buying group, with the real estate industry anxiously awaiting its entry into the market. But with few or no homes to buy during these pandemic times, it’s a hurry-up-and-wait scenario. The housing market has been underbuilding for years and are about 6.5 million homes short of population needs since 2000, according to National Association of REALTORS® data.
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: Lower
Mortgage rates are trending lower this morning. Last week the MBS market worsened by -2 bps. This was not enough to worsen mortgage rates or fees. The MBS market was volitile last week.
Today's Rate Forecast: Lower
Three Things: These are the three areas that have the greatest potential to impact rates this week: 1) Central Bank Palooza, 2)Covid, and 3)Global Flash PMIs.
1) Central Bank Palooza: The focus this week will be on the European Central Bank's Interest Rate Decision and Policy Statement on Thursday. We will also get an interest rate decision from the People's Bank of China. Our own Federal Reserve is in its "blackout" period ahead of next week's FOMC Interest Rate and Policy meeting.
2) Covid: Traders are once again freaking out about Covid as new cases surged 70% last week compared with the prior seven days to an average of 30,000 new infections a day, fueled by the Delta variant. Deaths rose 26% week-over-week to an average of 250 lives lost a day, mostly in unvaccinated patients. The resurgence of Covid is stoking a risk-off mood as investors consider whether new lockdown restrictions will sap the economic rebound.
3) Global Flash PMIs. We will get key Markit PMI readings from Germany, UK, USA, Eurozone and more this week.
Today's Potential Rate Volatility: High
We get a lot of economic news this week that can cause volatility in the market. The biggest of which is overseas banking interest rate decisions.
If you are looking for the risks and benefits of locking your interest rate in today, contact your mortgage professional to discuss it with them.
Richard Sardella has been actively managing and providing services in the mortgage industry for over 27 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.
MLO of record MLO.100007700 / NMLS#233568 / CHM NMLS#127716.