Archive for April, 2017

Subprime Student Loans Resemble Pre-Crisis Mortgage Loans

Posted on April 28, 2017 by Laura Lam

Millions of U.S. parents have taken out loans from the government to help their children pay for college … now a crushing bill is coming due.  Hundreds of thousands have tumbled into delinquency and default. In the process, many have delayed retirement, put off health expenses and lost portions of Social Security checks and tax refunds to their lender, the federal government. Student loans made through parents come from an Education Department program called Parent Plus, which has loans outstanding to more than 3 million Americans. These loan applications ask almost nothing about its borrowers’ incomes, existing debts, savings, credit…

Millennials Warm Up to Homeownership

Posted on April 27, 2017 by Laura Lam

For the second year in a row, Bank of America has conducted its Homebuyer Insights Report, which explores the attitudes, behaviors and preferences of current homebuyers. This year, a major focus was on millennials who are beginning to change their perspective on home buying.  According to Steve Boland, head of consumer lending for Bank of America, they surveyed young adults who had pulled the trigger and that it was the right decision.  “They are telling their millennial counterparts who are sitting on the sideline … this is going to be a great decision, it will help with your personal and…

Over 40% Students Don’t Make School Loan Payments

Posted on April 26, 2017 by Laura Lam

More than 40% of Americans who borrowed from the government’s main student-loan program aren’t making payments or are behind on more than $200 billion owed, raising worries that millions of them may never repay.  The new figures represent the fallout of a decade-long borrowing boom as record numbers of students enrolled in trade schools, universities and graduate schools. While most have since left school and joined the workforce, 43% of the roughly 22 million Americans with federal student loans weren’t making payments as of Jan. 1, according to a quarterly snapshot of the Education Department’s $1.2 trillion student-loan portfolio. About 1…

Housing Confidence Dips in March

Posted on April 25, 2017 by Laura Lam

Americans came down off their confidence high in March as fewer say now is a good time to buy a home, according to Fannie Mae’s Home Purchase Sentiment Index.  The index decreased 3.8 percentage points to 84.5 in March, down from February’s survey high. “Home purchase sentiment gave back some of the gains accumulated over the prior two months that sent the index to its survey high in February,” said Doug Duncan, Fannie Mae senior vice president and chief economist. “Strong home price appreciation has turned into a double-edged sword for the housing market as it boosted the net share…

Consumer Defaults Predicted to Rise in 2017

Posted on April 24, 2017 by Laura Lam

About 17% of all U.S. consumers are likely to default on a loan payment over the next year, according to a recent report from UBS. More interesting, perhaps, is who these defaulters are.  The UBS Evidence Lab reports that the group’s profile is “middle and upper income, younger, male, urban, and concentrated in the coastal regions.” The UBS researchers also found evidence that defaults on auto loans are likely to spread to more non-prime defaults on credit cards and personal loans. About 16% of all auto loans outstanding are subprime, amounting to $179 billion out of total auto loans of…

1.4 Billion Data Records Compromised in 2016

Posted on April 21, 2017 by Laura Lam

Cyber attackers launched 1,792 data breaches in 2016, which led to almost 1.4 billion data records being compromised worldwide, according to the newly released Breach Level Index (BLI) report from security provider Gemalto.  Identity theft was the leading type of data breach last year, accounting for 59% of all data breaches, the report said. More than half of the data breaches (52%) in 2016 did not disclose the number of compromised records at the time they were reported. The BLI is a global database that tracks data breaches and measures their severity based on multiple factors such as the number…

Multi-Family Lending Led 2016 Commercial Market

Posted on April 20, 2017 by Laura Lam

Fannie Mae and Freddie Mac were big players in the multi-family sector of the commercial real estate market last year.  According to the Mortgage Bankers Association (MBA), 2016 was the third highest on record for commercial real estate originations, and the largest share of those originations were for multifamily properties. Jamie Woodwell, MBA’s Vice President for Commercial Real Estate Research, said that commercial and multifamily bankers closed $490.6 billion in loans in 2016, making the year the third largest on record.  Multi-family originations were responsible for $214.1 billion, of the total, followed by office buildings, retail properties, hotel/motel, industrial and health…

Homebuilder Confidence Slips in April

Posted on April 19, 2017 by Laura Lam

Confidence among homebuilders cooled in April after jumping a month earlier to the highest level since mid-2005, according to data from the National Association of Home Builders/Wells Fargo.  Builder sentiment eased to 68 in April from a reading of 71 in March that was the strongest since June 2005. The median forecast in a Bloomberg survey was for 70; readings greater than 50 indicate more respondents reported good market conditions. The measure of the 6-month sales outlook fell to 75 after a reading of 78 that matched the highest since 2005. The index of current sales cooled to 74 this…

Younger Homeowners Opt for HELOCs

Posted on April 18, 2017 by Laura Lam

As interest rates increase, hovering higher than rates last year, buyers have little incentive to refinance their mortgages.  But as refis drop, a whole new loan type rises to take its place – home equity lines of credit (HELOC). While mortgage rates may be high, so are home prices, creating a wealth of new equity for homeowners. Thus, the increase in HELOCs, according to a recent CNBC article by Diana Olick.  More than any other generation, Millennials are utilizing this cash-out mortgage loan.  According to the article, “The last time interest rates rose as much as they have over the…

Student Loan Debt May Have Adverse Long-Term Impact

Posted on April 17, 2017 by Laura Lam

Rising student loan debt in the United States could ultimately hurt overall home ownership and consumer spending and erode colleges’ and universities’ ability to elevate lower-income students.  New York Fed President William Dudley, an influential monetary policymaker who was citing research from his institution, pointed to rising costs of higher education and student debt burdens as culprits in the troubling trend. Overall U.S. household debt is expected to surpass its pre-recession high later this year. Proportionally, Americans have shifted away from housing-related debt and toward auto and student loan debt, with aggregate student loan balances $1.3 trillion at the end of last year, up…