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Business Insider
01-07-2025
- Business
- Business Insider
Congrats, class of 2025 — you won't be able to buy a home in the next decade
Recent college grads face a long wait to be able to afford buying a home, according to an analysis by Mortgage Research Network. High home prices, student loan payments, and low starting salaries make it an uphill battle. Sacrifices like living with parents and cutting expenses are almost necessary to become a homeowner. Recent college graduate Amrita Bhasin wants to own property badly. She was inspired by her parents, immigrants from England and India who bought a property in the late '90s in Menlo Park, California, which is part of Silicon Valley. Bhasin declined to share what her parents paid for their San Francisco area property, but according to the median price for a home in Menlo Park in 1998 was $595,000. Today, the median price of a home in that neighborhood is $3.35 million. "I think that made me realize that having property is the biggest asset you can have," Bhasin told Business Insider. Bhasin, 24, graduated from UC Berkeley in 2023 and has since been looking to buy a home without much luck. During the fall of 2024, she moved in with her parents to save money, at the expense of her social life. Bhasin, who has experience working for Big Tech, now runs her own software startup, which sometimes requires commuting to San Francisco, a city she'd like to spend more time in. "I can't stay out late," she said. "My friends who live in San Francisco can just casually hang out with each other without much of a heads-up. For me, it's like an hour to get up to the city — you need to give a heads-up." Bhasin is taking matters into her own hands to try to save for a home, but data shows that for recently graduated Gen Zers, aggressive saving still might not help. The class of 2025 won't be able to comfortably buy until 2034 Due to the many factors working against them, first-time homebuyers are typically older than they used to be. According to the National Association of Realtors, the median age of a first-time buyer was 38 in 2024. In the 1980s, buyers were often in their late 20s. And now the average college graduate from the class of 2025 won't be able to afford a home until 2034. That's according to an analysis from Mortgage Research Network, released in May. The analysis estimated how long it would take to save for a 10% down payment in each state, factoring in home prices, average student loan balances and payments, and starting salaries for recent graduates in each state, using data from Zillow, and the US Census Bureau. The timeline to buy varies significantly by state, the study found. Hawaii had the longest average timeline at 17.8 years, while West Virginia had the shortest at 4.9 years. Tim Lucas, lead analyst and editor at Mortgage Research, highlighted Florida as an interesting case because it's normally thought of as an affordable place to live. The average home price is just over $400,000; however, average starting salaries — $58,009 — are below the national average of $64,598, according to Mortgage Research. "Yes, the home prices are reasonably affordable, like $400,000 per our data, but you have lower starting salaries and higher student debt, so that offsets any kind of affordability," Lucas told BI. Gen Z mostly wants to live where the jobs are, but that's expensive Bhasin has friends in San Francisco who pay up to $3,500 a month in rent, she said, but that's the price of living in the city. Christopher Tyson, president of the National Community Stabilization Trust, said the city is a popular place for recent graduates. "If you're in DC, or San Francisco, or Los Angeles, or New York, this is where the entry-level jobs are — but they're also extremely inflated, hyperinflated markets," Tyson told BI. "You could be making a good salary, but still not be able to afford rent," he continued. "And if you want to put yourself on a path to purchase, you may have to live with a parent or whatnot." Tyson noted that it's not easy for a lot of people to afford buying a home right now, but it's especially hard for younger generations just starting careers with no equity and little savings. To build up that buying power, sacrifices might have to be made. Bhasin lives at home, rarely eats out, and quit drinking all to help save for a home, sacrifices she believes are necessary to get what she wants: a home in California. About 40% of 18- to 30-year-olds lived with at least one parent in 2023, and according to an April Pew Research Center analysis, Vallejo, California, in the Bay Area, had the highest percentage of 25- to 34-year-olds living with their parents at 33%. "I just got into that mode of, 'I want to be an adult,' and I want to make sacrifices and I want to be the healthiest version of myself and set myself up on the path of my dreams," Bhasin said. "I do want to buy something in my 20s before I hit 30 because if I've saved appropriately, I should be able to," she added. "I don't want to be 35 and be still saving up for a home."
Yahoo
28-06-2025
- Business
- Yahoo
HELOC rates today, June 28, 2025: The home equity line of credit rate sees a slight decrease
HELOC interest rates sagged slightly today, allowing home equity line of credit borrowers a little cushion of time to shop for the best rate. HELOCs are a popular second mortgage option. Home equity borrowing in the first quarter of this year hit nearly $25 billion, up 22% compared to the same time last year — and the highest quarterly volume since 2008, according to the Mortgage Research Network. One reason may be aggressive pricing by lenders. "The average introductory rate on second lien HELOCs has declined by 2.5 percentage points in recent quarters, dropping below 7.5% in March," noted a study by Intercontinental Exchange Mortgage Technology. Now, let's dig into today's HELOC rates. Dig deeper: HELOC vs. home equity loan: Tapping your equity without refinancing This embedded content is not available in your region. According to Zillow, the rate on a 10-year HELOC dropped seven basis points to 6.50% today. The same rate is also available on 15- and 20-year HELOCS. Meanwhile, VA-backed HELOCs rose by three basis points to 6.15%. Homeowners have a staggering amount of value tied up in their houses — more than $34 trillion at the end of 2024, according to the Federal Reserve. That's the third-largest amount of home equity on record. With mortgage rates lingering in the high 6% range, homeowners are not going to let go of their primary mortgage anytime soon, so selling a house may not be an option. Why let go of your 5%, 4% — or even 3% mortgage? Accessing some of that value with a use-it-as-you-need-it HELOC can be an excellent alternative. HELOC interest rates are different from primary mortgage rates. Second mortgage rates are based on an index rate plus a margin. That index is often the prime rate, which today is 7.50%. If a lender added 1% as a margin, the HELOC would have a rate of 8.50%. However, you will find reported HELOC rates are much lower than that. That's because lenders have flexibility with pricing on a second mortgage product, such as a HELOC or home equity loan. Your rate will depend on your credit score, the amount of debt you carry, and the amount of your credit line compared to the value of your home. And average national HELOC rates can include "introductory" rates that may only last for six months or one year. After that, your interest rate will become adjustable, likely beginning at a substantially higher rate. You don't have to give up your low-rate mortgage to access the equity in your home. Keep your primary mortgage and consider a second mortgage, such as a home equity line of credit. The best HELOC lenders offer low fees, a fixed-rate option, and generous credit lines. A HELOC allows you to easily use your home equity in any way and in any amount you choose, up to your credit line limit. Pull some out; pay it back. Repeat. Meanwhile, you're paying down your low-interest-rate primary mortgage like the wealth-building machine you are. This embedded content is not available in your region. Today, FourLeaf Credit Union is offering a HELOC rate of 6.49% for 12 months on lines up to $500,000. That's an introductory rate that will convert to a variable rate later. When shopping lenders, be aware of both rates. And as always, compare fees, repayment terms, and the minimum draw amount. The draw is the amount of money a lender requires you to initially take from your equity. The power of a HELOC is tapping only what you need and leaving some of your line of credit available for future needs. You don't pay interest on what you don't borrow. Rates vary so much from one lender to the next that it's hard to pin down a magic number. You may see rates from nearly 7% to as much as 18%. It really depends on your creditworthiness and how diligent a shopper you are. For homeowners with low primary mortgage rates and a chunk of equity in their house, it's probably one of the best times to get a HELOC. You don't give up that great mortgage rate, and you can use the cash drawn from your equity for things like home improvements, repairs, and upgrades. Of course, you can use a HELOC for fun things too, like a vacation — if you have the discipline to pay it off promptly. A vacation is likely not worth taking on long-term debt. If you take out the full $50,000 from a line of credit on a $400,000 home, your payment may be around $395 per month with a variable interest rate beginning at 8.75%. That's for a HELOC with a 10-year draw period and a 20-year repayment period. That sounds good, but remember, it winds up being a 30-year loan. HELOCs are best if you borrow and pay back the balance in a much shorter period of time.
