Market Matters

Time to Think About Refinancing Your Mortgage? Source: NY Times Due to shifts in global bond markets, the average interest rate on a 30-year fixed-rate mortgage was 3.49 percent Monday, which is down from 4.2 percent a year ago and 3.9 percent at the start of 2016. As a result, now may a good time to check the rate on your home mortgage, because borrowers could save money by refinancing. For that, American homeowners can thank British voters, central banks in Europe and Japan, and a global economy that just can’t get out of first gear. Furthermore, mortgage rates could fall further in the weeks ahead as banks start to pass more of the savings from low rates in the bond market through to customers. Read the full story

Share of Student Loan Debt-Laden Borrowers RisingSource: DSNews.com Mortgage holders carrying student loan debt has increased by more than 40 percent over the past 10 years, bringing the count from 5.4 million in 2006 to 7.7 million in 2016, according to Black Knight Financial Services’ May 2016 Mortgage Monitor. Approximately 15 percent of active mortgages reside with borrowers who possess student loan debt. It was shown that borrowers with mortgages tend to perform better on student loan debt obligations than those without mortgages. The report also found the share of mortgage originations given to borrowers with student loan debt has increased to 19 percent of all originations, a new high in 2014. Borrowers with a 760+ credit score were shown to be the least likely to carry student debt, representing only less than 10 percent of that population. Read the full story     Nearly Two-Thirds of Americans Can’t Pass a Basic Test of Financial Literacy Source: Time Nearly two-thirds of Americans can’t calculate interest payments correctly, according to a new study. About a third said they didn’t even know how. Overall, a new study from the National Capability Study by the FINRA Foundation, which surveyed 27,564 Americans, found that nearly two-thirds of Americans couldn’t pass a basic financial literacy test, meaning they got fewer than four answers correct on a five-question quiz. Worse, the percentage of those who can pass the test has fallen consistently since the financial crisis to 37 percent last year, from 42 percent in 2009. That being said, the study found that many Americans have recovered from the financial crisis. Respondents who had no difficulty in covering expenses increased 12 percentage points, to 48 percent in 2015 from 36 percent in 2009. Read the full story   Can Local Governments Impede Housing Markets? Source: DSNews.com Housing markets have been adversely affected by the addition of significant building costs that did not exist as recently as 15 years ago, according to a recent survey of more than 100 builders by John Burns Real Estate Consulting (JBREC). Analysis of the top 33 markets in the country found that the number of new home communities has increased by only 4 percent in the last year, according to Burns. At that pace, the number of new homes permitted will not reach 1.1 million until 2023, which is consistent with historical averages. Local governments proved to be the primary reason that volume recovery was stronger in some areas than in others. The survey found that government attitudes toward housing tend to be either friendly and affordable or unfriendly and unaffordable. Read the full story   Is your client moving out of town? Find a The Housing Market Is Waving a Red Flag Source: Bloomberg Fervent speculation that abetted the housing bubble is showing up in the bloated share of foreclosures snapped up by third-party investors at auction—a record 31 percent in June, according to RealtyTrac data that starts in 2000. RealtyTrac senior vice president Daren Blomquist commented, “It's somewhat counterintuitive—as the market gets better and there are fewer foreclosures available, demand for those good deals, those bargains in the market goes up. When you see this high percentage of the properties going to third-party investors, that is a sign that these speculators may be over-inflating the market.” The third-party investors are gaining a bigger share of a shrinking pie, as foreclosure auctions made up 8 percent of all home sales in June, the lowest since August 2006. Read the full story

Market Matters

California pending home sales hold pace in May, C.A.R. reports Source: C.A.R. Building on April’s gain, California pending home sales continued to rebound on a year-to-year basis, as listings increased, primarily in seven of nine Bay Area counties, according to the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.). Statewide pending home sales rose in May on an annual basis, with the Pending Home Sales Index (PHSI) increasing 3.8 percent from 131.4 in May 2015 to 136.5 in May 2016, based on signed contracts. May’s increase comes as welcome news since closed transactions declined in May despite low interest rates and high housing demand. California pending home sales declined 3.6 percent on a monthly basis compared to April, which was almost entirely due to seasonal factors. Read the full story

American consumers feel better about their financial situationSource: McKinsey & Company While McKinsey & Company’s 2014 survey found that 40 percent of Americans said they were living paycheck to paycheck, only 28 percent made that claim in 2015, according to the findings of the US Consumer Sentiment Survey. Only 23 percent of survey respondents, down from a high of 48 percent in 2009, said they are finding it harder to make ends meet than they did a year ago. Most Americans—65 percent—expressed no concern about losing their job. In general, fewer American consumers are feeling economic pressure today than at any time since 2008. But it’s still no bed of roses. Only 20 percent of Americans expressed optimism about the country’s economy. Read the full story    Presidential Elections Have Little Impact on California Housing Market Source: C.A.R. Presidential elections have historically had little or no negative impact on the California housing market, according to findings by C.A.R. In an analysis of home sales dating back to 1990, the average growth in home sales during an election year is usually either slightly higher or lower each month than in non-presidential election years. Notably, sales growth is rarely negative during an election year, and there is no evidence of a systematic negative impact on home sales or prices stemming from election season. In fact, C.A.R. found that growth in home sales at the end of an election year actually outperforms non-election years by 7.1 percentage points. In a separate poll by leading think tank The Futures Company commissioned by C.A.R.’s Center for California Real Estate, nearly three-fourths (70 percent) of survey respondents who plan to buy a home agreed that they would like the current presidential candidates to address how to make housing more affordable in their campaigns. Read the full story    Survey shows majority of Americans not getting financial advice Source: Investment News A majority of U.S. adults are not getting professional financial advice, and among those who are, almost half say their advisers don't feel like long-term partners, according to a survey from Northwestern Mutual. The survey also revealed a lack of understanding about financial planning, even among those who had an adviser. While 68 percent of people do not have a professional adviser, 45 percent do not even know where to get the help they need as they move through life's stages and need different financial solutions, according to the survey. Only 41 percent say they get tailored attention from their advisers, while 44 percent believe their advisers don't give them a complete picture of their finances. Read the full story       US existing home sales hit 9-year high Source: Reuters U.S. home resales rose in May to a more than nine-year high as improving supply increased choice for buyers, suggesting the economy remains on solid footing despite a sharp slowdown in job growth last month. According to the National Association of REALTORS®, existing home sales increased 1.8 percent to an annual rate of 5.53 million units last month, the highest level since February 2007. April's sales pace was revised down to 5.43 million units from the previously reported 5.45 million units. Sales were up 4.5 percent from a year ago. Read the full story

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