Household Net Worth Reaches Record High – Industry Outlook

By March 21, 2018Industry Outlook

Mortgage Rates Post First Decline of 2018 – According to the most recent Consumer Price Index Report, after nine consecutive weeks of increases, borrowers finally got some relief with lower mortgage rates. “The Consumer Price Index report indicated inflation may be cooling down” says Len Kiefer, Freddie Mac’s deputy chief economist. “Following this news, the 10-year Treasury fell slightly and mortgage rates followed. The U.S. weekly average 30-year fixed mortgage rate fell 2 basis points to 4.44 percent, its first decline this year.”  

Senate Passes Banking Reform Bill Based on the Economic Growth, Regulatory Relief, and Consumer Protection Act, S. 2155 that was recently passed, it would ease compliance costs for smaller banks and possibly lead to more lending for residential and commercial property purchases. It would also lower reporting, disclosure, and other requirements under the Dodd-Frank Wall Street Reform and Consumer Protection Act, enacted in 2010 after the financial crisis. The bill also would require the two largest sources of mortgage financing, Fannie Mae and Freddie Mac, to accept alternative credit scoring standards that use rent and utility payment histories to better measure whether loan applicants can be reliable borrowers.

Most Markets Near Peak; No Signs of BubbleAccording to Florida Atlantic University and Florida International University’s new study, home prices in most U.S. housing markets are reaching their peak, but there’s no need to fear a repeat housing bust. Throughout the majority of the country, home prices have been rising steadily since 2012, and there are signs the runup may be starting to slow. “Housing markets are slowing, suggesting that we are nearing a peak in housing markets around the U.S.,” says Ken Johnson, a real estate economist at Florida Atlantic University. “But this is good news, as we are pulling back from the brink, unlike we did in 2007.”  

Household Net Worth Reaches Record High –Based on new data released by the Federal Reserve, Americans are feeling richer with household net worth nearing $100 trillion in the final quarter of last year. Rising stock markets and property prices were attributed to the jolt in the fourth quarter. Household net worth is the value of all of a consumer’s assets, like stocks and real estate, minus any liabilities like mortgage and credit card debt. Household net worth increased more than $2 trillion last quarter to a record $98.7 trillion in the final three months of last year, according to the report. Households in the U.S. saw their net worth increase to nearly seven times their disposable personal income in 2017. The impact real estate has had on that increase can’t be understated, economists say. The value of households’ real estate rose $511.2 billion, which reflects recent increases in home prices.

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