Home in winter

Daily Rate Update: February 8th-12th

Thursday – February 11, 2021

Home borrowing costs were unchanged this week and remain at historically low levels. Freddie Mac reports that the 30-year fixed-rate mortgage held steady at 2.73% with 0.7 in points and fees. A year ago at this time, the rate averaged 3.47%. Sam Khater, Freddie Mac’s Chief Economist. “New COVID-19 cases are receding, which is encouraging and that has led to a rise in Treasury rates. But, the run-up in Treasury rates has not impacted mortgage rates yet, which have held firm.”

First-time unemployment claims remain stubbornly high while 10 million Americans are still without a job. Displaced workers filing for first-time unemployment benefits fell in the latest week to 793,000 from 812,000. Continuing claims, or those receiving benefits for at least two weeks straight, fell to 4,545,000 from 4,690,000. Several of the states that were under lockdown measures have slowly begun to open up. When the economy fully reopens many workers should be able to go back to work.

“Published unemployment rates during COVID have dramatically understated the deterioration in the labor market,” Fed Chair Powell said yesterday. Speaking before the New York Economic Club, Fed Chair Powell said yesterday that there are misclassification errors within the numbers and the real unemployment rate is closer to 10%. The current unemployment rate is 6.7%. “We are still very far from a strong labor market whose benefits are broadly shared. The pandemic has led to the largest 12-month decline in labor force participation since at least 1948.”

Courtesy of Mortgage Market Guide 

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Wednesday – February 10, 2021

Mortgage rates remained at record lows in the latest survey but inched higher last week. The MBA reports that the 30-year fixed-rate mortgage rose four basis points to 2.96% with 0.36 in points for the week ended February 5, 2021. The Market Composite Index, a measure of total mortgage loan application volume, declined 4%, the Purchase Index fell by 5%, while the Refinance Index decreased by 4%. Spokesperson Joel Kan said, “Mortgage rates have increased in four of the first six weeks of 2021, with jumbo rates being the only loan type that saw a decline last week.”

The January inflation reading Consumer Price Index (CPI) rose 0.3% versus the gain of 0.4% expected while the Core CPI was unchanged and below the 0.2% expected. Year-over-year, the headline number rose 1.4%, unchanged from December while the Core rate came in at +1.4%, down from 1.6% in December. Inflation is presently tame but that could change by the first half of 2021. Core CPI strips out volatile food and energy.

The Biden administration’s $1.9 trillion stimulus relief plan is gaining steam in D.C. and will most likely be passed in the next few weeks. The plan includes direct $1,400 checks for those Americans who qualify along with funds to open schools safely, help for small businesses and enhanced unemployment benefits. Also, there is $350 billion in funding assistance to several states.

Courtesy of Mortgage Market Guide 

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Tuesday – February 9, 2021

The NFIB reports that small business optimism dropped further below the historical index average of 98 in January to 95. On the prospects of a $15 minimum wage, Jeff Brabant, NFIB Manager of Federal Government Relations said, “Unlike big businesses, small businesses simply can’t afford a doubling of the minimum wage at a time when they are struggling to survive the pandemic. We urge Congress to avoid plaguing Main Street with another costly federal regulation and allow for a successful small business recovery.”

The MBA reports that credit availability increased in January. The Mortgage Credit Availability Index (MCAI) rose by 2% to 124.6 in January. A decline in the MCAI indicates that lending standards are tightening, while increases in the index indicate loosening credit.The index was benchmarked to 100 in 2012. Spokesperson Joel Kan said, “Ongoing strength in home-purchase applications and home sales continue to signal robust housing demand, even as low housing inventory remains a constraint. However, even with overall credit availability picking up in three of the past four months, credit supply is still at its tightest level since 2014.”

Courtesy of Mortgage Market Guide 

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Monday – February 8, 2021

The housing sector continues to be a bright light for the U.S. economy due in part to ultra-low rates. Fannie Mae reports that its Home Purchase Sentiment Index (HPSI) rose by 3.7 points to 77.7 in January from December. The GSE (government-sponsored-entity) said that consumers reported a significantly more positive view of home-selling conditions month over month. Annually, the HPSI is down 15.3% Those who say it is a good time to buy a home remained unchanged at 52% while respondents who say it is a good time to sell a home jumped from 50% to 57%.

Over in the U.S. stock markets, strong earnings, an improving labor market and economy, the uptick in vaccinations coupled with more state economies reopening have been fueling record high stock prices. Both virus cases and death rates are lower though there are new virus variants, reports the New York Times. If the country can continue to see COVID loosen its grip on the economy, it could be the biggest stimulus received. The closely watched S&P 500 stock index hit a record intraday high today of 3,909.

The economic calendar is on the light side this week with the inflation reading Consumer Price Index on Wednesday. Fed Chair Powell will be speaking at the Economic Club of New York on Wednesday, but we do not see any new rhetoric after his recent press conference in late January.

Courtesy of Mortgage Market Guide 

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