Friday Rate Update

Mortgage Rates Rise for the First Time in 2017 

The rate for a 30-year fixed-rate mortgage averaged 4.19 percent this week, up from the previous week's 4.09 percent. At this time last year, the 30-year FRM rate averaged 3.79 percent.

This week's 15-year FRM rate averaged 3.4 percent, up from last week's 3.34 percent. A year ago, the 15-year FRM averaged 3.07 percent.

--ABA Daily Newsbytes

Nothing to do but pay until we die’ – student loan debts soar among the over-60 crowd

 

by Bob Sullivan

  It’s an old joke that’s quickly becoming reality for many student loan borrowers: “I’ll be paying off my student loans until I die.”

During the past decade, there’s been a stunning rise in student loan debt owed by older Americans. The number of Americans aged 60 or older with one or more student loans quadrupled from 2005 to 2015, the Consumer Financial Protection Bureau revealed last week. The average debt load on that group has swelled from $12,000 to $23,500. And there has been a near five-fold increase in the number of retired Americans who see their Social Security checks auto-deducted to pay off federal student loans in default.  
Ken Stumpf, a 70-year-old borrower from Colorado, lays out the stark reality he and his wife face.
“We are both buried from our own student debt. Nothing to do but pay until we die,” he said.
(This story first appeared on Credit.com. Read it there.)
Stumpf spent 15 years in the Air Force and U.S. Army, mostly working as an information technology specialist; then another 18 years as a civilian IT specialist for the Army. His mixture of federal and private student loans are current, but there’s no chance he’ll ever pay them off. In the mid-1990s, he went to graduate school to earn a master’s in Recreation and Park Administration. He borrowed $70,749 to pay for that degree. After a combination of deferrals and minimum payments, today his monthly student loan bill is a fairly reasonable $227. But his outstanding balance is $81,000 — more than he initially borrowed.

Read more here.

HOUSING FINANCE 

HUD Nominee Carson to Take ?Holistic' Approach to Housing
Testifying before the Senate Banking Committee yesterday, Housing and Urban Development secretary nominee Benjamin Carson said he would take a "holistic" approach to affordable housing if confirmed, noting that many factors -- such as healthcare and education -- must be considered when tackling issues affecting low-income Americans.

During the hearing, Carson affirmed his preference for de-regulation and his desire to bring efficiency to the department, but promised to advocate for HUD's budget as he works to craft "a world-class plan on housing in this country." One of his first actions if confirmed as HUD secretary would be to embark on a "listening tour" to seek feedback from regional HUD officials and consumers to understand the issues facing individuals and communities across the nation, and determine the effectiveness of various HUD initiatives, he said.

When talk turned to Fannie Mae and Freddie Mac, Carson noted that "we do have to have a mechanism, a backstop of some type" in place, but expressed concern over excessive taxpayer liability, adding that he supports introducing more private entities into the market to reduce the exposure of taxpayers to risk. He also said that the rental assistance programs offered by HUD were "essential," and that he would not move to abolish those programs without having an alternative in place. 

--ABA Daily Newsbytes

New From Freddie Mac....   

If your resolution is to get into a new home this year, it's important to understand your credit score. Your score is a vital piece of a lender's credit decision, influencing the credit that's made available to you and the terms that you're offered. So how is your credit score calculated? By using information from several pieces of data from your credit report, including types of credit, length, debt and payment history. Here's how credit scores break down for the general population:
Scores range from 300–850. The higher your score, the higher likelihood that you'll receive a great rate and keep some of that cash in your pocket. The importance of these categories can vary by person, but if you focus on managing your credit wisely, you'll be in good shape. For more information, take our free, online CreditSmart^® training to learn about building and maintaining good credit.

Make sure to follow this series to get more information about getting into a new home this new year and visit My Home by Freddie Mac^® for more on the importance of credit, including three tips to improve your score.

Consumer Delinquencies Rise in Third Quarter 
 
Delinquencies in closed-end loans rose during the third quarter of 2016, according to the ABA Consumer Credit Delinquency Bulletin released today. The report noted that delinquencies rose in five of the 11 individual loan categories and that delinquencies remain near historical lows. The composite ratio, which tracks delinquencies in eight closed-end installment loan categories, rose by six basis points to 1.41 percent of all accounts -- the same as the third quarter of 2015 and well below the 15-year average of 2.2 percent.

Bank card delinquencies rose the most, growing 26 basis points to 2.74 percent, yet also remaining nearly 100 basis points below their 15-year average as well. Delinquencies on property improvement loans rose three basis points to 0.94 percent, while delinquencies in the other two home-related categories -- home equity lines of credit and home equity loans -- fell to 1.16 percent and 2.59 percent, respectively.

“Delinquency rates have held near historical lows for an unusually long period due in large part to consumers’ skillful financial management, but it was inevitable that they would edge up eventually as part of the natural credit cycle,” said ABA Chief Economist James Chessen. “It’s important for consumers to remain cautious and maintain their discipline in keeping debt at levels they can comfortably manage.” Read more. 

--ABA Daily Newsbytes

Economic Update

Mostly Positive Reports through Holiday Season 

Economic reports released between Christmas and New Years were mostly positive, showing continued home price growth and increased consumer confidence but falling pending home sales.

• Home Price Growth Continues. Home price growth in 20 major metro areas continued to increase in October with year-over-year growth at 5.1 percent, up from September’s 5 percent increase, according to the Standard & Poor’s/Case-Shiller Home Price Index released last week. Prices have grown at a rate of 5 percent or higher since early 2015. All 20 cities reported year-over-year growth, and 17 cities reported increases from August. Year-on-year growth was highest in Portland, Seattle and Denver. Read more.
  
  
• Consumer Confidence Continues to Improve. The Consumer Confidence Index increased in December, landing at 113.7 -- up from 109.4 in November, the Conference Board said last week. “Consumer confidence improved further in December, due solely to increasing expectations, which hit a 13-year high,” said the Conference Board’s Lynn Franco. “The post-election surge in optimism for the economy, jobs and income prospects, as well as for stock prices, which reached a 13-year high, was most pronounced among older consumers. … Looking ahead to 2017, consumers’ continued optimism will depend on whether or not their expectations are realized.” Read more.
  
  
• Pending Home Sales Dip. Pending home sales fell 2.5 percent in November following a slight rise in October, the National Association of Realtors said last week. The November figure is 0.4 lower than the year prior. The index -- which reflects contracts but not closings on existing homes -- stands at 107.7, its lowest level since January. Read more.
• Consumer Confidence Continues to Rise. The Thomson Reuters/University of Michigan consumer sentiment index rose to 98.2 in December from November’s reading of 93.8, the highest reading since January 2004. Economists attributed the surge to optimism about the country’s economic trajectory following Donald Trump’s presidential victory. Read more.

RATES
Mortgage Rates Rise
The rate for a 30-year fixed-rate mortgage averaged 4.32 percent this week, up from the previous week’s 4.30 percent. At this time last year, the 30-year FRM rate averaged 4.01 percent.

This week’s 15-year FRM averaged 3.55 percent, up from last week’s 3.52 percent. A year ago, the 15-year FRM averaged 3.24 percent.

--ABA Daily Newsbytes