Morning Briefing: Multifamily sector drives housing starts down

Multifamily sector drives housing starts down… Older mortgage borrowers more likely to default… Slim gains for mortgage apps…

Multifamily sector drives housing starts down
There was a 9 per cent drop in housing starts in September as the multifamily sector took a sharp fall.

Data from the HUD and US Commerce Department show that single family starts were up 8.1 per cent to a SAAR of 783,000 units but multifamily starts declined 38 per cent to 264,000 units.

“After strong readings during the summer, multifamily production pulled back in September,” said NAHB Chief Economist Robert Dietz. “Still, we expect the multifamily sector to post a good year in 2016, though down a bit from last year, which was likely the peak year for this cycle.”

There was a stronger showing for permits issued for multifamily units, up 16.8 per cent to 486,000 compared to single-family permits which edged up 0.4 per cent in September to 739,000.
Older mortgage borrowers more likely to default
Older Americans may have generally higher credit scores than younger generations but may pose a larger risk to mortgage lenders.

A study by FICO shows that delinquencies for mortgage and auto loans are rising for older Americans, although they represent a relatively small proportion of those tracked by credit agencies; just 11 per cent of mortgage balances.

“For most loan types, delinquencies peak when consumers are in their 20s and starting to take loans,” said FICO data scientist Scott Schulz. “Mortgage delinquencies have a flatter curve and peak later, at age 44. Delinquency rates rise for auto loans and mortgages held by people in their late 60s, but only for mortgages do they get near their earlier peak.”

He added that the number of older Americans who still have sizeable mortgages and auto debts into their 70’s and 80’s is relatively small and that the delinquency figures may be skewed by  “a common occurrence in lending – those who have the resources pay off their loans over time, leaving only those more financially strapped consumers in the loan pool.”
Slim gains for mortgage apps
Mortgage applications were up slightly last week, with the Mortgage Bankers’ Association’s survey showing a 0.4 per cent rise in applications in the week ending Oct. 14 compared to the previous week on a seasonally adjusted basis.

Applications fell 9 per cent on an unadjusted basis with refinances down 1 per cent (up 3 per cent unadjusted) and purchase apps up 3 per cent (down 7 per cent unadjusted.)

The share of refinance applications was down to 61.5 per cent from 62.4 per cent a week earlier.