- Mike Cecchini
Realtor Market Insider - March 10, 2020
Millennials Lead Record FICO Score Boom
At a certain point you become an adult and things like credit scores matter. Well, 2019 was the year FICO scores hit a record high, mostly driven by millennials who are getting serious about their financial profiles.
According to HouseWire’s Kathleen Howley, “The average U.S. FICO score hit a record high of 703 in 2019, driven by Americans in their 30s, as a strong labor market helped people to pay their bills on time.” She goes on to add that the share of Americans with FICO scores above 700 rose to 59%, the largest ever, Experian said in a report recently.
Experian also reports that millennials who turn ages 24 to 39 in 2020 are now outnumbering Baby Boomers while hitting their “credit stride.” “Their economic emergence is reflected by a 25-point increase in their average FICO score since 2012 – the biggest increase of any generation.”
Approximately 1.2% of Americans had a perfect FICO score of 850, according to Experian, while the number of people with an 850 score has grown 63% in 10 years. Shannon Lois, one of Experian’s analysts, credits this to consumers being more educated about their credit. Of course, a strong labor market doesn’t hurt, hitting a 50-year low of 3.5% three times since September.
Wage growth, however, remains stagnant. The median household income was $65,666 in December, according to a Feb. 6 report by Sentier Research. Adjusted for inflation, that’s a gain of just 1.1% from a year earlier, the report said.
Source: Experian | TBWS
This Week’s Mortgate 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. Tracking these securities real-time is critical. For more information about the rate market, contact me directly. I’m among few mortgage professionals who have access to live trading screens during market hours.
Rates Currently Trending: Lower
Mortgage rates are moving lower this morning. Last week the MBS market improved by +29bps. This was enough to move rates lower last week. We saw extreme rate volatility at the end of the week.
This Week's Rate Forecast: Lower
Three Things: These are the three areas that have the greatest ability to move rates this week. 1) Coronavirus, 2) Central Bank, and 3) Oil.
1) Coronavirus: As it has been for the past couple of weeks, the continued spread of the Corv-19 virus will get the most attention of the market place, and it will only escalate each week for the near term. Here are the early morning headlines, you may not see all of them in the mainstream media, but they are all factual, and the bond market is certainly paying very close attention to them.
Overnight, the number of confirmed cases in Spain nearly doubled, going from 589 on March 8 to 999 on March 9. In response, the government has ordered all schools and universities in the country to close.
Cases in the U.S. Double to over 500
Millions of test kits are due to be delivered in the U.S. this week
Mayor de Blasio says NYC could see hundreds of cases in 2-3 weeks
Italy reports 2nd straight 1,000+ jump in cases, deaths jump 60%; mortality rate in Italy hits 5%
2) Central Bank: On deck is the European Central Bank. The United States made an emergency cut last week, and Canada cut at its regularly scheduled meeting along with a few other countries. The ECB will meet on Thursday, and with an interest rate of zero percent already, the market is eager to see if they will go to the dark side of the force and go to negative interest rates.
3) Oil: Ole Jed Clampett is no longer a millionaire, as global oil prices tumble to $25. This is due to a few reasons. First, oil has been under pressure anyway as production in China has crawled to a stop as well as other major industrial production hubs. Last week we reported that OPEC had agreed to cut daily production by 1.5 million barrels. Russia, however, was not on board, and this week we see that Saudi Arabia and Russia are now in a deadlock to see who blinks first, which is sending oil prices to some of their lowest levels in history.
This Week's Potential Volatility: High
Rates and stocks are plummeting on extreme volatility so far today. The market is hyper-focused on the coronavirus and the surprise move in oil. We expect the rate and overall market volatility to continue throughout the week, as has been the case for a couple of weeks.
Bottom Line:
If you are looking for the risks and benefits of locking your interest rate in today or floating your loan rate, contact your mortgage professional to discuss it with them.
Michael Cecchini
ECOterra Design-Build
La Puerta Real Estate Services
(505) 918-8476
mike@mikececchini.com
Vancellen Sturgeon
President/Broker
PSd, Ltd. NMLS#: 183922 (505) 908-1057
vancellen@nmlender4life.com
About Vancellen Sturgeon
Vancellen Sturgeon began her mortgage career in the commercial lending field in 1981 and moved into residential lending in 1998. She has an exceptional background in mortgage lending and financial advising.
About This Report and Disclosure Information
All information furnished is provided by thetbwsgroup only for informational purposes. Forecasting shall be considered as events which may be expected but not guaranteed. Neither the forwarding party and/or company nor thetbwsgroup assume any responsibility to any person who relies on information or forecasting contained in this report and disclaims all liability in respect to decisions or actions, or lack thereof based on any or all of the contents of this report.
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