5 Apr 2021

It’s Just The Facts: March 2021

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  1. STATUS QUO FOR TWO MORE YEARS – The most recent meeting of the Fed ended on 3/17/21 with their interest rate forecast calling for no interest rate hikes by the Fed until at least 2023 (source: Federal Reserve).
  2.  HAVE KIDS, GET MONEY – An estimated 40% of the 126 million households in the United States have children under the age of 18, or 50 million households.  An estimated 90% of the 50 million households (45 million) will qualify for the expanded Child Tax Credit (CTC) per the American Rescue Plan Act of 2021.  The new CTC could pay $300 per month per child under age 6 and $250 per month per child between ages 6-17 beginning 7/01/21.  Please consult a tax expert for details (source: Tax Policy Center).
  3. THEY’LL SPEND IT SOMEWHERE – American consumers spent $2.81 trillion on foreign imports of goods and services in calendar year 2020.  American consumers are forecasted to receive $800 billion in the form of stimulus payments, unemployment benefits and child tax credits through the American Rescue Plan Act of 2021, and then turn around and spend $360 billion of the $800 billion on foreign imports.  Chinese companies are predicted to sell Americans $60 billion of the $360 billion (source: Allianz).
  4. HIS PROMISE – President Joe Biden said on Wednesday 3/17/21 that “anybody making more than $400,000 will see small-to-a-significant tax increase.”  Biden wants the changes to be effective 1/01/22.  US presidents are paid $400,000 per year (source: ABC’s Good Morning America).
  5. TRILLIONS TO HELP – The 6 bills (totaling $5.6 trillion of aid) passed by Congress to combat the impact of the pandemic in the last 13 months are 1) HR # 6074 ($8.3 billion in March 2020); 2) HR # 6201 ($3.5 billion in March 2020); 3) HR # 748 aka the CARES Act ($2.3 trillion in March 2020); 4) HR # 6312 aka CARES # 2 Act ($484 billion in April 2020); 5) HR # 133 ($900 billion in December 2020); and 6) HR # 1319 aka the American Rescue Plan Act ($1.9 trillion in March 2021) (source: Congress).
  6. ALMOST HALF OF ADULTS – 46% of American adults experienced a loss of income or they live with someone that experienced a loss of income in the nearly 1-year following President Donald Trump�s declaration of a pandemic-driven “national emergency,” i.e., from 3/13/20 to 2/28/21 (source: Census Bureau).
  7.  SAME NUMBER ABOVE AND BELOW – 50% of the 153.8 million Form 1040s that were filed for tax year 2018 (a total of 76.9 million returns) reported less than $40,000 of adjusted gross income (source: IRS).
  8. AND IN THE NEXT YEAR – 2020 was the 10th year in the last 70 years, i.e., 1951-2020, that the US economy had contracted.  Our nation�s “gross domestic product” (GDP) shrunk by 3.5% last year.  Following the 9 previous “down”years, the US economy has rebounded in the next year with positive growth 7 out of 9 times, growing by an average of +3.3% per year for all 9 “bounce back” years (source: Commerce Department).
  9.  FED THINKS – The median forecast (released on Wednesday 3/17/21) made by the 11 members of the Federal Open Market Committee (FOMC) for “change in real GDP” during 2021 was +6.5%.  Actual GDP (gross domestic product) annual growth has been at least +6.5% just once (1984) in the last 50 years (source: Federal Reserve).
  10. TEN YEARS APART – Banks repossessed just 1,428 homes nationwide in January 2021.  Banks repossessed 78,133 homes nationwide in January 2011 (source: Attom Data Solutions).
  11. IT’S THE RENTERS THAT ARE HURTING – Just 1 in 39 homeowners (2.5%) was at least 3 months behind in paying their monthly mortgage as of 12/31/20.  However 1 in 5 renters (20.5%) was at least 3 months behind in paying their monthly rent as of 12/31/20 (source: Consumer Financial Protection Bureau).
  12. YOUR HOME – 62% of home mortgages (33.4 million) are federally backed, i.e., the loans are guaranteed by Fannie Mae, Freddie Mac, the Federal Housing Administration or the Veterans Benefits Administration.  The government announced on 2/16/21 that the moratorium on foreclosures and evictions on federally backed, single-family home mortgages had been extended to 6/30/21 (source: Federal Housing Finance Agency).
  13. QUICK, BEFORE RATES RISE – 13% of outstanding home mortgages nationwide as of 12/31/20, i.e., 7.2 million mortgages out of 53.9 million mortgages, were refinanced during 2020 (source: Federal Reserve Bank of NY).
  14. IMPACT ON BOND INVESTORS – The yield on the 10-year Treasury note rose 0.37 percentage points (from 1.09% to 1.46%) in February 2021.  That’s the largest monthly rise in the 10-year note yield since November 2016 when the yield went from 1.84% to 2.37%, a jump of 0.53 percentage points (source: Treasury Department).

Courtesy of Mortgage Market Guide 

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