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» VISIT US ONLINE @ DSNEWS.COM 15 an additional rate offer, save between about $1,000 and $2,100 on their mortgage. at's a substantial amount of saving, given that there's a very strong demand for low down-payment products. For example, if a borrower is looking at a home price of $250,000, with a 3 percent down payment that translates to a down payment of around $7,500. Now, if that borrower compares rates and saves $1,000 to $1,400 on the mortgage, that's a substantial saving on a down payment that's so small, especially for an entry-level borrower. If a borrower is more aggressive in their search and gets five quotes, then their expected benefits increase to about $2,900. What economic factors will determine the health of the housing industry towards the end of 2018 and going into 2019? Inflation would be the biggest factor by far, because the fear of rising inflation is what's driving the run-up in rates. e economy is running hot, and the Federal Reserve is being hawkish on inflation. Today, the Fed is trying to get income growth higher via a low unemployment rate. e danger with that is, that if the economy runs a little too hot, then it starts to generate inflation that's above the 2 percent rate that the Fed is comfortable with. Today, inflation is at exactly 2 percent. However, the biggest factor in 2018 —and even in the first half of 2019—would be to see if inflation continues to grow at roughly the same pace or if it increases. If inflation increases, mortgage rates will go up, adding to the headwind of inventory and increasing prices that buyers are already facing. e growth in income can somewhat taper the impact of rising mortgage rates, because if the economy is growing well, then it's also generating income growth that will help buy- ers sustain the increased costs of purchasing a home. But, if inflation rises because of geo- political reasons or a rise in energy costs, then the economy, as well as the housing market could face a problem. Speaking about buyers, we've seen an active millennials homebuyer market this year. What is driving this trend? One clear driver is that millennials are aging. We keep thinking of them as being young, but the truth is that the largest age cohort in the U.S. today is 28 years old—which is the peak of the millennial age-group. As a result, this group has been in the prime renter age for the past five years and are now moving into their prime first-time homebuying years. is group will be a strong driver of the market over the next three years. Apart from it being a natural progression, today's job market is another major factor that's driving more millennials to buy homes. e job market has been very strong for this generation over the past three to four years and along with financial products that target millennials, such as low down- payment products like Freddie Mac's Home One, make it a little easier for first-time homebuyers to become homeowners. "Today, inflation is at exactly 2 percent. However, the biggest factor in 2018– and even in the first half of 2019– would be to see if inflation continues to grow at roughly the same pace or if it increases. If inflation increases, mortgage rates will go up, adding to the headwind of inventory and increasing prices that buyers are already facing." THE LEADER IN DEFAULT SERVICING NEWS Help shape the next issue of DS News. Drop us a line at Editor@DSNews.com.