Saving for a mortgage

It’s Just The Facts: July 2020

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  1. CHEAP MONEY – The national average interest rate for a 30-year fixed rate mortgage as of 7/16/20 was 2.98%, an all-time record low, producing a $421 monthly “principal and interest” payment per $100,000 borrowed. The national average rate rose slightly to 3.01% on 7/23/20 (source: Fannie Mae).
  2. LOST THEIR HOME – Banks repossessed 527,906 single-family homes in the 1st half of 2010 during the global mortgage crisis that began in late 2008. A decade later, banks repossessed just 37,917 single-family homes during the 1st half of 2020 at the beginning of the COVID-19 pandemic (source: Attom Data Solutions).
  3. SELLERS’ MARKET – There were 350,000 fewer existing single-family homes for sale in June 2020 vs. June 2019, i.e., 1.57 million for sale this year vs. 1.92 million for sale last year (source: Nat’l Association of Realtors).
  4. JUST IN CASE – The 5 largest banks in the USA announced in mid-July 2020 their plans to set aside $35 billion to prepare for what could be a wave of future defaults – mortgages, credit cards, personal loans, auto loans and corporate bankruptcies. The banks estimate that $24 billion of the $35 billion of potential losses could occur over the next 12 months (source: CNN).
  5. DIFFERENT STATES – In both Florida and Texas, general sales tax revenue makes up at least 60% of their total tax revenue collected, the highest percentages in the nation. General sales tax revenue makes up just 12% of Vermont’s total tax revenue. Neither Florida nor Texas has a state income tax (source: Census Bureau).
  6. SPENDING DECLINES AS WE AGE – The average retired couple spends 23% less money in their 6th year of retirement compared to what they spent in their 1st year of retirement (source: Health and Retirement Survey).
  7. SEEMS CRAZY – If a bond investment was offered at a negative interest rate of 0.5%, that means investors (the lenders) would be willing to pay the issuer of the bond (the borrower) a rate of 0.5% per year for the duration of the bond for the privilege of lending the borrower money (source: BTN Research).
  8. CAN’T TOUCH ME – As of 7/09/20, an estimated 25% of the 5.4 million renters in New York City have not made a monthly rental payment since March 2020. A 3/27/20 federal moratorium prevents NYC landlords from evicting delinquent tenants or charging them late fees (source: Community Housing Improvement Program).
  9. YOUR HOME – 62% of first lien home mortgages 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 6/17/20 that the moratorium on foreclosures and evictions on federally backed, single-family mortgages has been extended to 8/31/20. Borrowers who experience “financial hardship” due to the pandemic may extend the moratorium for an additional 6 months to 2/28/21 (source: Federal Housing Finance Agency)
  10. .THE RICHEST – The top 1% of wage earners in the USA reported at least $515,371 of pre-tax income in 2017 and own an estimated 39% of the total wealth in the country (source: Center on Budget and Policy Priorities).
  11. STILL DOWN BUT COMING BACK – As of the date that the CARES Act was signed into law by President Trump (3/27/20), total spending by American consumers was down 30.2% from total spending in the country in January 2020. As of 7/01/20, total spending by American consumers had rebounded and was down just 9% from total spending in January 2020 (source: Opportunity Insights Economic Tracker).
  12. HEAD SOUTH – The government divides the USA into 4 geographical areas: Northeast, South, Midwest and West. As of May 2020, the Northeast states had 972,000 job openings while the states in the South region had 2.070 million job openings. The total number of US job openings: 5.397 million (source: Department of Labor).