Morning Briefing: Saving for a downpayment not a priority for renters

by Steve Randall19 Nov 2015
Saving for a downpayment not a priority for renters
A new report reveals that renters are not prioritizing saving for downpayments and are carrying large levels of debt. Freddie Mac’s survey of renters found that many feel under pressure and two thirds carry debt each month. Although more than half are optimistic about managing their debt it means that they are not able, or necessarily inclined, to save for buying a home of their own.

An unexpected emergency is the top priority (59 per cent), retirement savings (51 per cent) and children’s education (50 per cent) all take priority over saving for a downpayment (39 per cent) which is not great news for the housing and mortgage sectors.

On a more positive note the survey found that 58 per cent of Gen X renters expect to purchase a home in the next three years, compared to 42 per cent of Millennials and 33 per cent of Baby Boomers. Overall, almost half (48 per cent) of renters in single-family properties are dissatisfied with renting, and are more likely to purchase a home in the next three years than multifamily renters (57 per cent vs. 28 per cent).
Mortgage applications rise
Mortgage applications rose last week according to data from the Mortgage Bankers’ Association. For the week ending Nov. 13 the Market Composite Index increased 6.2 per cent on a seasonally adjusted basis from a week earlier.  On an unadjusted basis, the Index decreased 6 per cent; the Refinance Index increased 2 per cent; the seasonally adjusted Purchase Index increased 12 per cent; the unadjusted Purchase Index decreased 3 per cent compared with the previous week and was 19 percent higher than the same week one year ago.

The refinance share of mortgage activity decreased to 58.6 per cent of total applications from 59.8 per cent the previous week. ARM share decreased to 6.3 per cent; FHA share increased to 14.4 per cent from 14.1 per cent; VA share increased to 11.7 per cent from 10.9 per cent; USDA share remained unchanged at 0.7 percent.
Homes near good schools unaffordable for most
Homebuyers hoping to live near to good schools are paying increasingly high prices and many find them unaffordable. RealtyTrac analyzed school test scores and compared the locations of the best schools with the local home prices. Out of 1,823 zip codes with at least one good school 65 per cent were unaffordable for average wage earners. LA, New York, San Francisco, Chicago and San Diego were the cities with the least affordable zip codes. Chicago conversely also had the most affordable zip code followed by Detroit, Phoenix, Miami and Charlotte.



Is TILA-RESPA a good or bad thing long term?