Mortgage rates has caused 60 percent of American millennials sharing their home:


Published Date 2/27/2017

Realtor Report

The proportion of American millennials sharing their home has hit its highest level in 115 years:

A recent study published in a blog by Trulia shows that 60 percent of young Americans live with parents, other relatives, friends or roommates as high rents and high home prices make solo living unaffordable.

Trulia’s Mark Uh, writes that in Miami a typical renter would need to spend almost half of their income on renting a one-bedroom apartment but for a millennial this rises higher, to 54 percent.

Millennial renters also pay more than typical renters in Boston and Los Angeles but less in San Francisco and New York.

The article highlights the savings that are achievable by renting a two-bedroom home with a roommate rather than living alone in a one-bedroom home.

Double-digit savings can be achieved in eleven of the top 25 rental markets but Miami is a unique case. Despite the saving being the largest among the top rental markets, the 19.2 percent saving from renting with a roomie would still leave the rent unaffordable by US government metrics.

Of course, with many low-down payment options available and mortgage rates still near historic lows, this may be a market segment that needs to be educated on the value of purchasing instead of renting.


This Week’s Mortgage Rate Summary

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.

Rates Currently Trending: Higher

Mortgage rates are trending slightly higher this morning.  Last week the MBS market improved by +53 bps.  This was enough to improve mortgage rates or fees.  Mortgage rates experienced moderate volatility.

This Week’s Rate Forecast: Higher

Three Things: These three areas will receive the most attention from long bond traders and therefore have the greatest potential to impact mortgage rates: 1) Fed, 2) President Trump and 3) Domestic.

1) Fed: There is no question that the majority of voting members and even Janet Yellen herself have attempted to get the markets to move towards a “live” March Fed meeting. But so far, their lip-service has not worked. This is their last week to make an effort to move the needle for a rate expectation as we enter a “black out” period next week for the Fed.

We get their Beige Book on Wednesday which takes all 12 Federal Reserve Districts’ anecdotal reports and combines them specifically to be reviewed and used in their interest rate decision.

  • 02/28 Esther George, John Williams and James Bullard
  • 02/29 Robert Kaplan and the Beige Book
  • 03/01 Loretta Mester
  • 03/02 Charles Evans, Jeffrey Lacker and Janet Yellen

2) President Trump: He is speaking today in front of the State Governors and the bond market will react to any statements that he makes to them. But the real key is Tuesday nights address to Congress where he may (or may not) discuss specifics on taxes, spending and could even present a budget that will need to be voted on.

3) Domestic: After last week’s “yawner’ of lower level economic releases, we have a very robust schedule with some of the biggest releases of the quarter. We get the 4th QTR GDP but this has already been released once and will probably see a small upward revision, Durable Goods are too volatile for economists to draw any real correlation with economic growth. So, while those are big name reports, the most important ones are actually the Core PCE on Tuesday (will it move from 1.7% closer to the 2% target?), manufacturing data with Chicago PMI and ISM will be key as will Friday’s ISM Services reading.

This Week’s Potential Volatility: High

Today we expect to see a bit of an uptick in mortgage rates from the move lower last week.  Overall, volatility should be relatively high for the week because of the three things listed above.

Bottom Line:

If you are looking for the risks and benefits of locking your interest rate in today or floating your loan rate, click here to schedule a call with our advisor.