With residential applications at a 5-month industry low, it’s time for a pun. "How much does it cost to buy sixty female pigs and forty male deer? One hundred sows and bucks." How much does it cost to hire & train someone? Amazon says it will take on more than 120,000 seasonal workers for the holidays this year. Last year, 14,000 seasonal employees went on to get regular full-time positions. Amazon is gearing up for the holiday season and announced that it expects $42 billion to $45.5 billion in sales in the fourth quarter. Speaking of bucks here's what $12 million of them buys you in New Joisey.

This morning we saw Fannie's 3^rd quarter profit: $3.2 billion. Heck, remind me again why Congress would/could come together to figure out a plan to "vote Fannie off the island" and do away with that revenue source? That $3 billion dividend goes a long way.

Research by Bankrate finds 63% of millennials don't have a credit card versus 35% for people over age 30; certainly the use of debt varies by age. But news regarding younger folks with student debt continues to evolve, and SoFi and Fannie Mae announced a new loan option that enables homeowners to pay down student debt using equity in their homes.

"With SoFi's new offering, the Student Loan Payoff ReFi, homeowners will can refinance mortgages at a lower rate and pay down the balance of an existing student loan. With its cash-out refinance student loan payoff plan, SoFi will pay down the student loan by disbursing payment directly to the servicer of the student debt. SoFi is a Fannie Mae approved seller servicer.

"This loan option, available through SoFi, is designed to help homeowners that manage their own student debt or those who have co-signed loans, which often includes parents. An estimated 8.5 million households in the U.S. could potentially pay down or completely pay off their student debt obligations with this new option: per Experian data, the average homeowner with outstanding cosigned student loans has a balance of $36,000 on those student loans, and those with outstanding Parent PLUS loans have $33,000 in student debt.

This subject brings up how millennials (age 19-35) of diverse backgrounds use debt. Now that they are the #1 group in the workforce, every lender is taking notice. As noted, a Bankrate study found 67% of millennials don't even own a credit card. And outside of the millennial cohort, only 19% of those making $75,000 or more do not have one. Clearly, almost everyone except millennials use credit cards. 

Millennials, it turns out, don't view debt in the same way that their predecessors did. In fact, per the Fed, only 37% of households overseen by 35-year-old Americans or younger had credit card debt in 2013 - a whopping 25% decrease vs. the same age group in 2007. The New York Times even declares this is the lowest level of debt since 1989. 

Most attribute this to "the Great Recession." That event deeply scarred this group of consumers, pushing them to cut their debt load as they tried not to add any more. They saw their parents lose jobs and observed firsthand the strain that was put on their families. Plus, this group is already burdened by heavy student loans. Younger customers are looking to pay student debt off first. There are also technology and other changes afoot: younger consumers prefer to pay in cash, use their debit card or transfer funds directly from their bank account. They are not afraid to use alternate ways of paying either such as Venmo, PayPal, etc. 

The question for depository banks and non-depository lenders is how this shift in debt impacts future financial activities for millennial customers. If things continue, they will not have much of a credit history. Thus, they will likely have to defer big purchases, will not be able to apply for home mortgages or get auto loans as readily as Gen X or Boomers. There could be an opportunity here for community bankers and nimble lenders, however. This group has a deep seeded fear of debt, so they may be more likely to repay it, making them a better risk profile perhaps. They will need education, but you can provide that too and those that will take over the family business down the road.

In this vein, the NAR is releasing its latest Profile of Home Buyers and Sellers. Here are the big changes over the past 35 years. Most in the biz will agree with the findings: the first-time homebuyer is a smaller percentage than it has been in the past, the internet is not replacing the real estate agent, houses have been getting bigger of the past 30 years, but have leveled out in recent years, down payments have been going down, and the home search process is taking longer than ever due to tight inventory.

Zillow has their own report on trends in housing. Here is the executive summary (the report is very long and detailed): "The home buying experience is both an intimidating financial transaction and an emotional milestone. Half of home buyers in the U.S. are under 36, meaning a new generation- Millennials-is shaping the future of real estate. Despite demographic reports about young adults' urban lifestyles, Millennials share their parents' aspirations for a single-family home, often in the suburbs. 

"The process of finding or selling a home is much more collaborative for Millennials than for older generations. They bring all available tools to the process, including their smartphones, social media and online networks. While older generations rely on real estate agents for information and expertise, Millennials expect real estate agents to become trusted advisers and strategic partners. 

"Millennial home buyers are also diverse. While only 9 percent of all homeowners are Hispanic, nearly 15 percent of the Millennials buying homes are Hispanic-reflecting the changing demographics of the American middle class. 

"Homeownership remains a vehicle for wealth in the U.S., but it can also be a financial burden, as families stretch their finances to afford the space they need, and large, dated homes owned by Baby Boomers and the Silent Generation demand maintenance and improvements."

But despite pent-up demand for houses, housing starts remain anemic given where we are in the economic cycle. Housing construction has been the missing link this whole recession. Housing construction historically experienced a sharp rebound after the economy bottomed, but not this time around. Some of that was due to an overhang of inventory from the bubble years that needed to be sold, however that adjustment was made by 2011 or so. Since then, tight inventory and rising prices have been the story. The reason why this recovery has been so tepid has been the absence of a robust housing construction market.

Millennials aside, immigrants are much more educated today than they were a couple of decades ago. That is creating issues in the housing market. Traditionally, low-skilled immigrants were builders of housing. Today many are arriving with college degrees, and therefore they are much more likely to be buyers of housing. This partially explains why inventory is tight and why it is hard to find skilled labor. It doesn't explain the costly permit process in many communities, or the lack of buildable land of course.

But builders are happy. The NAHB Builder confidence in the market for newly built, single-family homes in September jumped six points to 65 from a downwardly revised August reading of 59 on the NAHB/Wells Fargo Housing Market Index (HMI). This marks the highest HMI level since October 2015.  "As household incomes rise, builders in many markets across the nation are reporting they are seeing more serious buyers, a positive sign that the housing market continues to move forward," said NAHB Chairman Ed Brady. "The single-family market continues to make gradual gains and we expect this upward momentum will build throughout the remainder of the year and into 2017."

Shifting our collective gaze to the capital markets, regulatory changes have pushed bank ownership of government bonds to $2.4 trillion for the industry, the highest level since the Fed started capturing it in 1973. And speaking of the Fed, and its Federal Open Market Committee, it didn't do anything yesterday but all but said we can expect a December rate hike.

Analysts poured through the FOMC's announcement, examining every word and phrase. The noticeable changes in the statement included recognition that inflation had increased vs. earlier in the year, though it is still below target, with a removal of expectations for inflation "to remain low in the near term, in part because of earlier declines in energy prices."

The 10-year note improved nearly .25 to yield 1.80%, and 5-year Notes improved by .125, but agency MBS prices only improved a few "ticks" - hardly noticeable to borrowers.

Today we've already had the Bank of England's decision about short term rates over there. A panel of UK judges decided that Parliament must vote before starting the two-year process to Brexit, so we'll be dealing with that situation for years to come. In this country, we've had the Challenger Job Cuts (30k), Initial Jobless Claims (+7k to 265k - a continued good labor market), preliminary Q3 productivity and unit labor costs (+3.1%, +.3%). Coming up are Markit's Non-Manufacturing PMI, September Factory Orders, and October ISM Non-Manufacturing PMI. We find the 10-year yielding 1.82% and agency MBS prices a shade worse than Wednesday's close.

Jobs and Announcements

Led by former GMAC president Steve Abreu, "Nexera Holding's Blustream (wholesale) and Newfi (direct) channels leverage a unique operating model that drives down costs resulting in superior pricing. Nexera is rapidly expanding and needs to add key positions to continue that growth. Current opportunities include Commercial Lending Manager, Vice President of Marketing, Quality Control Analyst, Inside Loan Advisor, Project Manager, and Wholesale Account Managers for the Bay Area, San Fernando Valley, Colorado, Arizona and Pacific Northwest." To learn more about Nexera and these open positions, please email careers@nexerallc.com in confidence.

"Do you know that some of the most successful wholesale AEs started out as loan officers and processors? We do! That's why we are currently interviewing LOs and processors who have the potential to join one of the most dynamic and high producing teams of wholesale account executives in the industry. For individuals in these roles looking for career growth and higher earning potential, it may be time to take that next step in advancing your career with a lender who was recently ranked in the Top Ten in Wholesale Volume nationally in Scotsman Guide's Top Mortgage Lenders 2015 and continues to grow. Many LOs and processors already have the experience needed to build quality customer relationships, service accounts, and prospect for new business as a wholesale account executive.  Are you ready to take that next step? If you are a loan officer or processor that's ready to take the next step in your career and grow with a leading lender, come grow with us!" Contact Rob Chrisman with inquiries and resumes.

SoFi's Mortgage Division continues its rapid growth and officially opened its Operations Center in Salt Lake City this week. SoFi is currently searching for Underwriters (and Underwriting Manager), Mortgage Loan Processors (and Assistants), Mortgage Loan Officers (and Assistants) and Loan Document Drawers/Closers (especially with experience handling New York closing). SoFi Mortgage is the fastest growing of SoFi's lending verticals. SoFi has made over $1 billion in mortgage loans and is currently licensed in 26 states and the District of Columbia. For confidential inquiries please contact Lisa Hubenette, Director of Recruiting (415-858-2667).

In wholesale news, brokers should know that Parkside Lending "would like to celebrate the Champion Chicago Cubs on their first World Series victory in 108 years. In honor of the Cubs 7 game win, Parkside will offer all Illinois residents 10.8 (11) bps special to fee on all rate locks for 7 days (1 day for each game) starting Monday, November 7 and ending Monday, November 14, 2016. We promise this has nothing to do with the Cavaliers beating the Warriors. Please contact info@parksidelending.com for more information."