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Reports US

US stock market daily report (August 04, 2014, Monday)

August 5, 2014, Tuesday, 05:11 GMT | 01:11 EST | 09:41 IST | 12:11 SGT
Contributed by Millennium Traders


According to the U.S. Census Bureau, homeownership across the USA fell to 64.7% during Q2 for this year - striking the lowest level seen in 19 years. According to the Mortgage Bankers Association, mortgage applications to purchase a home are down 12% from same period during 2013.

Many factors affecting the drop in homeownership include - rising home prices, soaring student loan debt, increase in mortgage rates and rising closing costs. Former low down payment option for mortgages backed by the Federal Housing Administration (FHA), is more expensive than it used to be. FHA increased insurance premiums for borrowers with average credit scores in the wake of the housing crisis. Potential borrowers are unable to buy a home because they can't afford the mortgage payments due to higher interest rates charged.

Normal average home buyers range from age 24 to age 34, according to Bureau of Labor Statistics. During July, individuals in that age range saw a drop in employment 75.6% in July, 75.8% in June and 76% at the beginning of 2014. A large deterrent in buying a home is large student debt. Potential home buyers are facing declines for mortgages due to excessive debt - much attributed to student loan debt - and credit score.

Underwriting for a home mortgage applicants is far more strict than in the past. Fees charged government mortgage companies - Federal National Mortgage Association (FNMA-OTC BB) and Federal Home Loan Mortgage Corporation (FMCC-OTC BB) - are affecting the affordability for new homeowners. Over the past year, closing costs on a mortgage have increased by 6% with a current average of $2,539 for a $200,000 mortgage. Origination fees accounted for a majority of the closing costs increase, soaring by 9% and third-party fees have risen by 1%. Banks are known to blame the increase in closing costs due to stricter regulation.

Maybe since banks have to account for their actions due to the housing crisis, they actually have to pay people to do their job - passing the cost along to potential home buyers.
Across the nation, closing costs are reportedly the highest in Texas at an average of $3,046. The lowest closing costs are reported in Nevada at $2,265.

According to a recent survey by Fannie Mae, the majority of adult children currently living at home with their parents - higher than normal - will rent rather than buy, when they finally do move out.