Mortgage Rates Fall for Fourth Consecutive Week 

The rate for a 30-year fixed-rate mortgage averaged 3.79 percent this week, down from the previous week’s 3.81 percent, Freddie Mac said yesterday. At this time last year, the 30-year FRM rate averaged 3.66 percent.

This week’s 15-year FRM averaged 3.07 percent, down from 3.10 percent last week. A year ago, the 15-year FRM averaged 2.98 percent.

--ABA Daily Newbytes

This Is the Biggest Financial Worry for Millennials

A new report by Facebook indicates that millennials are not as financially illiterate as some believe, as 86 percent are saving money each month. Millennials account for 40 percent of financial conversations on the social media platform, with female users accounting for more than 60 percent of content involving peer-to-peer payments, loans and mortgages, banking, investments, and credit cards. The report also reveals that 68 percent of millennials do not feel like they are understood by their bank; close to 50 percent are open to changing banks, credit card companies, or brokerage accounts; and 33 percent describe their current bank in unflattering terms. Twenty-five percent of millennial respondents believe credit cards will worsen their financial standing, and those who use credit cards do so primarily to build credit (46 percent) and increase their financial flexibility (36 percent). However, 57 percent of millennials would rather pay with cash.

From "This Is the Biggest Financial Worry for Millennials"
CNBC News (01/25/16) Whitten, Sarah

Home Price Growth Continues to Rise 

Home price growth in 20 major metro areas rose again in November, with year-over-year growth landing at 5.8 percent, up from October’s gain of 5.5 percent, according to the Standard & Poor’s/Case-Shiller Home Price Index released yesterday. Fourteen cities reported increases in November, with Miami seeing the highest monthly gain. Year-on-year growth was highest in Portland, San Francisco and Denver.

---ABA Daily Newsbytes

Five Million Homeowners Could Benefit From Refinancing

As many as 5 million borrowers could benefit by refinancing their mortgages, as rates have fallen below 4 percent, according to a new report from Black Knight Financial Services. The report indicates that 2.4 million borrowers could save $200 or more per month, and 1.9 million could save $100 to $200 per month. "If rates go up 50 basis points from where they are now, 2.1 million borrowers will fall out of the running," says Ben Graboske, senior vice president at Black Knight Data & Analytics. "A 100-basis-point increase would eliminate another million, leaving only 2 million potential refinance candidates, the lowest population of refinance candidates in recent history." Black Knight also reports a 35 percent increase in home equity lines of credit in the last year, with about 37 million borrowers pulling out $112,000 on average from their mortgaged properties.

From "Five Million Homeowners Could Benefit From Refinancing"
RealtyBizNews (01/13/15) Wheatley, Mike

Home Buyers May Get Helping Hand From Stock Meltdown

Concerns about the Chinese economy has helped push down mortgage rates to a two-month low, with the 30-year mortgage rate dropping to 3.92 percent in mid-January. Although the Federal Reserve boosted a key short-term rate in December for the first time in almost 10 years, the rate hike has not translated into upward pressure on long-term Treasurys or home mortgages. Meanwhile, improvements in the labor market should boost new construction and home sales this year, barring any slowdown in the economy related to the issues in China. With mortgage rates low and an increased supply of homes for sale putting a damper on home-price gains, experts say conditions should be easier for home buyers.

From "Home Buyers May Get Helping Hand From Stock Meltdown"
MarketWatch (01/19/16) Bartash, Jeffry

Friday Rate Update

Mortgage Rates Continue to Dip 

The rate for a 30-year fixed-rate mortgage averaged 3.92 percent last week, down from the previous week’s 3.97 percent, Freddie Mac said yesterday. At this time last year, the 30-year FRM rate averaged 3.66 percent.

Last week’s 15-year FRM rate averaged 3.19 percent, down from the rate of 3.26 percent the week before. A year ago, the 15-year FRM rate averaged 2.98 percent.

---ABA Daily Newsbytes

Alternative Mortgage Lenders Are Changing Home Buying

Alternative mortgage lenders are having a big impact on home buying in many U.S. markets. The two main goals of non-bank companies without customer deposits is to offer mortgage rate transparency and help borrowers complete the home loan process quickly and mostly online. Many are locally owned and family-run businesses serving their hometowns, and they often face fewer federal regulations and welcome borrowers with less-than-perfect credit. Alternative mortgage lenders now account for 45 percent of all home loans, the largest share in 20 years, according to the Federal Reserve. The increase comes as the biggest banks back away from the mortgage industry, citing low profit margins and high legal risks. Credit unions, meanwhile, are playing a bigger role in the mortgage market. The CUNA Mutual Group reports that credit unions originated over 8 percent of U.S. mortgages last year, almost double the amount in 2010.

From "Alternative Mortgage Lenders Are Changing Home Buying"
Christian Science Monitor (01/10/16) Bundrick, Hal M.

Study: Millennials Have High Debt Burden, Low Financial Capability 

U.S. millennials are lacking in their understanding of financial concepts, with only 24 percent demonstrating basic financial knowledge, according to a recent study by PwC and the Global Financial Literacy Excellence Center on young adults’ financial capability. Of those surveyed, 34 percent reported that they were “very unsatisfied” with their current financial situation, and 50 percent said they lacked the ability to cope with even a moderate financial shock.

The study, which surveyed Americans aged 23-35, found that debt obligations, particularly from student loans, are a main point of concern; two thirds of millennials—including 80 percent of those with college degrees—say they carry at least one source of outstanding long-term debt, and 54 percent are concerned about their ability to repay. In addition to student loan debt, more than half of millennials report carrying over a credit card balance in the last 12 months, and many find themselves turning to alternative financial services, such as payday lenders or pawnshops.

Despite the considerable burden of debt that millennials face, the study also pointed out that few have sought professional financial advice—only 12 percent reported seeking help with debt management.

--ABA Daily Newsbytes

After Winning at Chess, This Computer May Help Decide Loans

Heroz Inc. says it is adapting the computer program that recently defeated a professional player of shogi, the Japanese version of chess, for the financial industry. Experts say the computer programming required to defeat a shogi master is more complex than that required for conventional chess, as there are more potential moves and more complicated rules on the reuse of captured pieces. The Japanese startup hopes the lessons it has learned about recreating human judgment can be applied to crunching data for banks when determining whether borrowers are creditworthy, particularly when making mortgages. "There are times that computers can see as correct what humans perceive to be wrong," says Heroz CFO Daisuke Asahara. Tests performed by the company show that its computers can successfully crunch data on consumers' deposit and withdrawal information and from social networks to help banks make lending decisions, and Heroz is looking into whether its computer program can be applied to financial-market forecasting.

From "After Winning at Chess, This Computer May Help Decide Loans"
Bloomberg (01/03/16) Allan, Gareth; Ito, Komaki; Kawamoto, Shingo

Housing Reports Positive at Year's End
Reports of home sales and prices released in the previous two weeks were positive:

• New Home Sales Rise. Sales of new homes rose 11.9 percent in November to a seasonally adjusted annual rate of 490,000 units. November’s figure was 9.1 percent above a year prior, and the median new home price for the month was $305,000. Read more.

Home Price Growth Accelerates. Home prices in 20 major metro areas were up 0.1 percent in October, according to the Standard & Poor’s/Case-Shiller Home Price Index. Home prices in the Case-Shiller 20-city composite were up 5.5 percent year-on-year, up from a 5.4 percent yearly growth rate in September---

ABA Daily Newsbytes