The Industry Box October 2016
Average Mortgage Interest Rate
Declines for Millennials while Loan Amounts Increase
As the Fed weighs increasing interest rates, average rates on home loans obtained by millennials fell to 3.763 percent in August, according to the latest Ellie Mae Millennial Tracker™. This demonstrates a steady decrease from a high of 4.124 percent in February. At the same time, the average loan amount to millennial borrowers increased to $181,326, compared to July’s average of $180,413. The average loan amount for both conventional and FHA loans also increased, to $203,884 and $172,667, respectively.
After increasing the past few months, the average FICO score for millennial borrowers remained stable at 725 in August. The percentage of millennial conventional loans in August continued to climb, resulting in 63 percent of total closed loans, up from 62 percent in July. Meanwhile, FHA loans continued to represent 35 percent of all closed loans in August, down from both June and May’s 37 percent share. The average debt-to-income ratio (DTI) rose to 24/36. Loan-to-value (LTV) increased to 88 in August.
“In August, millennial borrowers enjoyed the lowest average interest rates we have seen all year,” said Joe Tyrrell, executive vice president of corporate strategy at Ellie Mae. “And we are seeing average loan amounts creep up for conventional and FHA loans as millennials take advantage of these low rates.”
Unchanged since March, women were listed as the primary borrower on 32 percent of closed loans. Consistent with July data, among women who were listed as the primary borrower, 39 percent were married and 61 percent were single. Comparatively, among male primary borrowers, 59 percent were listed as married and 41 percent were single, a significant difference from women. The average age for borrowers remained consistent in 29.0 for female primary borrowers and 29.3 for male primary borrowers.
Investor Derby: Small Cap Stocks Lead Market in Q3
Small caps and foreign stocks were the place to be in the third quarter.
That's the conclusion to be drawn from The Associated Press's analysis of nine types of investments, which shows investors pocketed the largest gains from their holdings of small cap stocks, emerging market stocks, and large foreign stocks in the third quarter.
Most types of investments did well in the third quarter, with high-yield bonds and large cap U.S. equities the next best performers over the last three months. Small caps and emerging market stocks were also the best performing sectors over the last year.
Real estate investment trusts, municipal bonds, and gold were the worst performing investments during the third quarter.
The AP analysis, using data from FactSet, shows that the top-performer over the past 10 years for regular investors, those who invest a portion of their income every month and hold for the long term, is still real estate investment trusts. It's also been the best performing sector over the last five years.
That's true even though the period includes the U.S. housing crisis. After the crisis passed, investors snapped up REITs as real estate gradually rose in value and investors were drawn to the large dividend payments REITs pay.
Since 2006, emerging market stocks, foreign big cap stocks and gold have been the worst-performing sectors.
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