Credit Scores Nationally Surge to Record High – Industry Outlook

By March 18, 2020Industry Outlook

Mortgage Rates Rise, Taking a Surprising Turn – Based on Freddie Mac reports, after hitting a record low last week, rates reversed course recently and inched up. Rates still remain at “extraordinary levels,” Freddie Mac said in its weekly rate report. The 30-year fixed-rate mortgage climbed from last week’s 3.29% record low average to 3.36% this week. “As refinance applications continue to surge and lenders work to manage capacity, the 30-year fixed-rate mortgage ticked up from last week’s all-time low,” says Sam Khater, Freddie Mac’s chief economist. “Mortgage rates remain at extraordinary levels and many homeowners are smartly weighing their options to refinance, potentially saving themselves money.”

Source and link to the full article:  Freddie Mac

Gen Xers Most Likely to Be Denied Mortgage – According to the National Association of REALTORS®’ 2020 Home Buyers and Sellers Generational Trends Report, mortgage applicants 40 to 54 years old, those in Generation X, have the highest loan denial rates. Low credit scores and high debt-to-income ratios are the chief causes, perhaps lingering problems from the Great Recession. Lenders denied 7% of Gen Xers’ applications, compared to a 5% denial rate across all other age groups.  “Generation X has a higher share of denied mortgages because they are most likely to have sold a distressed house or have been underwater during the recession. Plus, they may have taken on more debt from their children’s student loans,” Jessica Lautz, NAR’s vice president of demographics and behavior insights, told Yahoo! Finance.

Source and link to the full article:  “Gen X Denied a Mortgage More Than Any Other Generation, Study Shows,” Yahoo Finance (March 5, 2020)

Credit Scores Nationally Surge to Record High – Based on Experian’s new analysis, Americans’ credit scores are improving, particularly among millennials. The average FICO score in the U.S. surged to a record of 703 in 2019.  The share of Americans who had FICO scores above 700 increased to 59%, the highest on record. “Millennials ages 24 to 39 now outnumber baby boomers and are finally hitting their credit stride,” according to the Experian report. “Their economic emergence is reflected by a 25-point increase in their average FICO score since 2012, the biggest increase of any generation.” FICO scores above 700 are considered the “marker of good credit by many lenders,” according to the report. That could position a borrower to be eligible for the best mortgage rates. The percentage of Americans with an 850 FICO score has increased 63% in the past decade, according to the report. About 1.2% of Americans have a perfect FICO score of 850. “Americans are making better credit decisions,” Shannon Lois, Experian’s head of analytics, consulting, and operations, told HousingWire. “Which is an indication of consumers being more educated about their credit.”

Source and link to the full article:  “Average FICO Score Reaches Record High, Experian Says,” HousingWire (Feb. 28, 2020) and “Average FICO Score Hits Record High—Here’s the Average Credit Score in Every State,” CNBC (Feb. 10, 2020)

Buyers Expected to Face Fierce Spring Bidding Wars – According to the National Association of REALTORS®, house hunters should expect steep competition this spring. The new coronavirus remains a wild card for the housing market, but if the scare is short-lived, buyers are poised to swoop down in droves. “January has already been strong, with prices up, home sales up, and listings down quite a bit,” Daryl Fairweather, Redfin’s chief economist, told USA Today. “So home buyers are more likely to face competition.” Inventory in January was the lowest it has been in more than two decades. At the end of the month, there were 1.42 million homes for sale, including condos, co-ops, and single-family homes. That is down 10.7% from a year earlier, according to data from the National Association of REALTORS®. However, buyer demand has remained high, which has put pressure on home prices. The median sales price for all housing types was $266,300, up 6.8% from a year ago, NAR’s housing data shows.

Source and link to the full article:  “Hello Bidding Wars: Home Sellers Gain Edge in This Year’s Housing Market,” USA Today (March 6, 2020)

Leave a Reply