Student Loan Secondary Market, Jobs Update, Strong Home Sales & Appreciation

Many of us wonder why rates on student loans rates are much higher than the market rates for cars, mortgages, or HELOCS and why you can’t re-finance student loans without moving them to a private bank and losing many of the hardships benefits or repayment options. Here’s a brief story of someone who sued Navient in an attempt to discover who actually owned her loan. Spoiler alert – this won’t be the next Erin Brockovich.

Rates – moved sideways this week and remain at historic lows. Rates are down approximately 3/4% from this time last year.

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Jobs – another strong job report for the month of June showing nearly 5 million job gains and a reduction in unemployment rate by 2%. The increase in average weekly & hourly earnings is roughly 2% lower from the previous report. Althought he headline unemployment figure was reported at 11.1% the U6 unemployment which includes workers only marginally attached to the labor force and part time workers (for economic reasons) is at approximately 18%. The number of people that filed for unemployment for the first time is still 7X pre-covid levels. Nearly 20M people are making continuing unemployment claims.

Applications – mortgage applications for purchase decreased by 1.8% from the previous week but are stil up 15% from this time last year.

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Pending Home Sales – saw the largest month-over-month gain on record but didn’t quite reach pre-covid levels. This indicates continuing strength in the housing market.

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Appreciation – we are finally starting to see appreciation data from covid months and values remain nonplussed. Values are up nearly 5% on a year over year basis and our neighbor Seattle has climbed its way back on the charts.

Forbearance – the Mortgage Bankers Association reported that the number of loans now in forbearance is at 8.47%. This number is unchanged from last week – approximately 4.2 million homeowners are in forbearance plans. Fannie Mae & Freddie Mac loans (Conventional) are performing the best at 6.26% forbearance rates vs. 9.09% bank loans, 10.07% for private & portfolio loans, and 11.83% for Ginnie Mae Loans (FHA, VA, USDA).

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