MReport September 2020

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M REPORT | 55 O R I G I NAT I O N S E R V I C I N G DATA G O V E R N M E N T S E C O N DA R Y M A R K E T THE LATEST DATA Millennials Leading Homebuying Boom Data show that 20- to 40-year-olds represent the most significant opportunity in the housing market today. D ata shows that 20- to 40-year-olds represent the most significant opportunity in the housing market today. Purchase activity by millennials is rising, according to the Ellie Mae Millennial Tracker. Census data indicate some 4 million millennials will reach age 29-30 each year for the next several years, which is important be- cause that is the average age this generation enters the home buying market, Ellie Mae Chief Operating Officer, Joe Tyrrell said. "Millennials represent the single biggest opportunity in the hous- ing market today," he said. Purchase share—the percentage of all loans closed for purchases— grew for the second straight month, reaching 56% in June, up nine percentage points from May. This marks the highest purchase share since March 2020, according to Ellie Mae. According to Ellie Mae data, in Q2 2020, millennials were re- sponsible for more closed purchase loans than any other generation. Tyrrell goes on to say that millennials are emerging as a "domi- nant force" … "driving the market forward." The boom is just starting, he says. "We expect that their entry into the market, as they reach prime homebuying age, will fuel purchase transactions in 2021, 2022, and 2023." More in-depth data show that during June, millennial purchasing power grew as the average interest rate for all loans closed by this generation fell to a new Ellie Mae Millennial Tracker low of 3.36%. The previous low occurred just one month prior, when the average rate dropped to 3.42%. Average time to close on all loans increased from 43 days in May to 45 days in June. Time to close for refinances jumped five days— from 44 days to 49—during this time. Average time to close has risen month over month during every month since March. Tyrell also pointed out the importance of digital mortgage tech- nology. "Capabilities like online applications, automatic updates, and eClosing offer millennial customers the seamless digital experi- ences they expect while freeing up time for the human interaction necessary to answer questions or concerns they may have as they navigate the homebuying process for the first time." Ellie Mae's Millennial Tracker divides millennials into two groups: older millennials—borrowers between 30- and 40-years-old, and younger millennials—borrowers between 21- and 29-years-old. Average interest rates were nearly identical for the two groups, with younger millennials securing an interest rate of 3.35%, on aver- age, compared to 3.34% for older millennials. Younger millennials also had a lower average FICO score, as this subgroup gravitated toward FHA loans, which have less stringent credit requirements. Millennials in their 20s were more likely to buy homes in June. Their share of purchase was 78%, compared to 47% for older millennials, who are more likely to already own a home and seek to refinance. Americans Seeking Home Equity and Other Loans Due to Congress' inability to greenlight an additional stimulus package, a new study shows how Americans are looking to offset the economic impact. C OVID-19 has wreaked havoc on the economy and incomes of scores of Americans as struggling businesses have been compelled to lay off workers, according to While the job market has rebounded, unemployment has re- mained stalled at 10.2%, while state economies—without exception— have at least partially opened their doors again, many stakes, prompt- ed by spikes in the pandemic, have put a freeze on advancing to the next level of reopening. Furthermore, due to the in- ability of Congress to greenlight an additional stimulus package prior to the lapse in benefits stemming from the initial one, the economy is expected to be mired in the damage done by CODIV-19 for some time. To remain float, Americans have had no recourse other than to borrow money. Meantime, they're seeking salva- tion through means such as home equity and payday loans. But those options aren't for everyone, with interest in them varying from state to state. WalletHub compared the 50 states and District of Columbia across four key metrics combining internal credit report data with data on Google search increases for three loan-related terms. The comparison showed that people required loans, such as mortgage/ home loans, the most in New York, followed by Oklahoma, Tennessee, Missouri, and Maryland. The housing affordability crisis has only escalated following the onset of the pandemic, due to which more than 36 million Americans have filed for unem- ployment. More than 4 million people have entered forbearance plans to either defer or pay re- duced amounts on their mortgages. Meantime, there's been no hint of abatement in the acceleration of home prices. To address the state of afford- ability in America, tightening lending standards, further inventory strain with a possible suburban boom, and just how long the virus' impacts could last, lead- ers at the Inlanta Mortgage, TD Bank, and the American Enterprise Institute's Housing Center, as well as economists from Freddie Mac, First American Mortgage Solutions,, and others weighed in. When discussing affordabil- ity, Steve Kaminski, Head of U.S. Residential Lending for TD Bank stressed the importance of looking at the consumer's financial position. "It was at a very strong point coming into the pandemic. The ra- tio of debt service to disposable in- come was at historic lows, unlike prior to the liquidity crisis of the Great Recession, where there was a lot of stress on the borrower's financial position," Kaminski said. "Comparing the high debt levels of that time versus consumers' current position, which is much stronger, debt was the lowest it's ever been, frankly."

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