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Homeownership Tied to Financial Well-Being
Older American homeowners have a greater degree of financial well-being than those who do not own a home, while lower housing costs are also correlated to more positive financial well-being. This is according to a survey titled “Financial Well-being of Older Americans,” released by the Consumer Financial Protection Bureau (CFPB) Office of Financial Protection for Older Americans.
According to the federal agency, the survey aims to provide “detailed information on the financial well-being scores by individual characteristics and issues of interest to people who work with older adults.” The survey seeks to qualify financial well-being across a range of topics including employment and retirement, family and specific living arrangements, financial knowledge, debt, health-related experiences and housing.
In its section dedicated to the topic of housing, the survey details that older homeowners have a greater degree of financial well-being and autonomy compared with their peers who are not homeowners. However, a unifying factor among both renters and homeowners is that having low monthly housing costs is “positively associated with financial well-being.” Financial well-being is also higher among older adults who express a high level of satisfaction with their housing situation and/or community compared with those who are less satisfied.
Source: Reverse Mortgage Daily
Volatility -- What Does It Mean?
Last year was very interesting. The previous year we had great gains in the stock markets and enjoyed lower interest rates. We began 2018 with even more stock gains, fueled by a significant corporate tax cut. But the boost to the economy at a time when we were already at low employment levels caused interest rates to rise throughout the majority of 2018. There is no doubt that lower interest rates played a big part in the robust stock market rebound we have witnessed in the past decade.
The Dow fell below 7,300 in March of 2009. It topped 26,000 in 2018. That is a spectacular gain. Even if you measure it from the "top" of just over 14,000 before the recession, that is a solid gain. Thus, when you look at the drop of just over 6.0% for 2018, that seems like a drop in the bucket. But what has many concerned is the increased volatility we have witnessed over the last few months.
Stocks did not move back in a straight line. They had quite a roller coaster ride. There were several factors which seemed to cause market jitters in addition to rising interest rates. These included trade skirmishes, some economies slowing down overseas and waning stimulus from the tax cut. But certainly, interest rates were a big part of the concern. Which is why the end of 2018 was very interesting. Oil prices and interest rates pulled back with stocks. So we wonder, if the rise in rates were halted for now, would that give the markets more confidence? It looks like the start to 2019 will be interesting as well.
The Markets
- Rates fell again in the past week, though they started rising a bit towards the end of the survey week.
- For the week ending January 10, Freddie Mac announced that 30-year fixed rates fell to 4.45% from 4.51% the week before.
The average for 15-year loans decreased to 3.89% and the average for five-year adjustables fell to 3.83%.
- A year ago, 30-year fixed rates averaged 3.99%, less than one-half of one percent lower than today.
- Attributed to Sam Khater, Chief Economist, Freddie Mac -- "Rates on home loans fell to the lowest level in nine months, and in response, applications for residential loans jumped more than 20 percent. Lower rates combined with continued income growth and lower energy prices are all positive indicators for consumers that should lead to a firming of home sales."
Note: Rates indicated do not include fees and points and are provided for evidence of trends only. They should not be used for comparison purposes.
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Breaking: The Internal Revenue Service, responding to pressure from the Mortgage Bankers Association and other industry trade groups, said it would resume processing tax transcript information requests it originally said it had to suspend during the partial government shutdown. The agency told MBA effective Jan. 7 it would resume such requests through the Income Verification Express Service program, known as IVES, which had been suspended since the partial government shutdown went into effect Dec. 22. Lenders use IVES to verify income for loan originations. MBA and other industry trade groups had expressed concerns that the suspension could result in delayed closings. Because it will take time to ramp this service up to normal operating status, it may initially take a few days to process requests that have been backlogged since the funding lapse began in December, noted MBA President and CEO Robert Broeksmit, CMB. Source: Mortgage Bankers Association
The Administration wants to work with Congress on freeing Fannie Mae and Freddie Mac from government control, though it’s considering pursuing some changes on its own, Treasury Secretary Steven Mnuchin said recently. “I would like to get them out of conservatorship,” Mnuchin said during a roundtable interview at Bloomberg’s Washington office. “My preference would be to do something that has bipartisan legislative support.” Mnuchin didn’t specify on what Treasury might do unilaterally, though he indicated that securing Senate confirmation of a new Federal Housing Finance Agency director will be key to the administration’s efforts. “There are changes we will be able to make with a new director at the FHFA,” Mnuchin said -- “My overall view is on the one hand, I want to make sure there’s access to liquidity and capital for consumers,” Mnuchin said. “On the other hand, I want to make sure whatever we do in restructuring them, we don’t put the taxpayer at risk.” Source: Bloomberg
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