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Daily Rate Update: January 4th-8th

Thursday – January 7, 2021

Home borrowing costs hit fresh record lows this week and continue to buoy the housing market. Freddie Mac reports that the 30-year fixed-rate mortgage fell to 2.65% this week with 0.7 in points and fees, the lowest since record-keeping began in 1971. A year ago at this time, the rate averaged 3.64%. Sam Khater, Freddie Mac’s Chief Economist said, “The combination of rising mortgage rates and increasing home prices will accelerate the decline in affordability and further squeeze potential homebuyers during the spring home sales season.”

Americans filing for first-time unemployment benefits fell in the latest week to 787,000 from 790,000 and well below the March and April highs. Continuing claims, or those receiving benefits for at least two weeks straight, fell to 5,072,000 from 5,198,000. The sector was decimated by the pandemic-induced shutdowns in March, April and May and now the fears are increasing that additional lockdowns will take place in certain parts of a country.

The badly-hurt service sector gained some strength back in December after being decimated by the lockdown measures that took place last spring. The ISM Service Index rose to 57.2 last month from 55.9 in November. The Institute for Supply Management says that ‘this reading represents a seventh straight month of growth for the services sector, which has expanded for all but two of the last 131 months.’ Spokesperson Anthony Nieves said, “Most respondents are cautiously optimistic about business conditions with the recent approval and impending distribution of vaccines.”

Courtesy of Mortgage Market Guide 

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Wednesday – January 6, 2021

Mortgage rates remained at record lows in the latest survey though they have inched higher in the first couple of business days in January. The MBA reports that the 30-year fixed-rate mortgage fell four basis to 2.86% with 0.32 in points. The Market Composite Index, a measure of total mortgage loan application volume, rose 1.7%, the Purchase Index fell 1.6% while the Refinance Index rose 3%. The MBA’s Joel Kan said, “The steady demand for home buying throughout most of 2020 should continue in 2021. MBA is forecasting for purchase originations to rise to $1.59 trillion this year – an all-time high.”

Private payroll growth turned negative in December with big losses seen in the leisure and hospitality sector of the economy. Several states are still under lock down measures due to the coronavirus fallout. ADP Private Payrolls fell by 123,000 in December, the first loss seen in eight months. Leisure and hospitality lost 58,000 jobs while the transportation and utility sector shed 50,000. “As the impact of the pandemic on the labor market intensifies, December posted the first decline since April 2020,” said Ahu Yildirmaz, vice president and co-head of the ADP Research Institute. “The job losses were primarily concentrated in retail and leisure and hospitality.”

Courtesy of Mortgage Market Guide 

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Tuesday – January 5, 2021

CoreLogic reports that home prices nationwide, including distressed sales, rose 8.2% from November 2019 to November 2020, up 1.1% in November 2020 compared with October 2020. Looking ahead the numbers aren’t as robust. CoreLogic sees a 2.5% annual gain from November 2020 to November 2021 and a monthly gain of 0.2% from November 2020 to December 2021. The housing sector continues to shine and is shaping up for a solid year in 2021. Frank Martell, President and CEO of CoreLogic said, “Vaccine distributions and stimulus actions should revitalize economic activity and keep home purchase demand and home price growth strong.”

Stricter COVID lock downs across Europe and the Georgia Senate runoffs are just two of this week’s headline risk events that are impacting the markets today. British PM Boris Johnson has imposed new lock down measures due to a new variant of COVID that seems to be more easily transmissible. The new strain is said to be in 4 U.S. states and 33 counties. This uncertainty is applying selling pressure on stocks. The Georgia Senate runoff races are underway with the markets hoping for a balance of power once the votes are counted.

Courtesy of Mortgage Market Guide 

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Monday – January 4, 2021

The U.S. stock markets had a strong year in 2020 despite the pandemic-induced shutdowns that had considerable negative effects on the economy. The closely watched S&P rose 16%, the Dow was up 7.3% while the tech-heavy NASDAQ soared 44%. The markets may see some volatility this week given the final jobs numbers for 2020 will be released for December from ADP and the government’s Jobs Report that includes Non-Farm Payrolls and the Unemployment Rate.

The new year begins with visions of endless government spending in 2021 and expect more and more stimulus from the government in 2021 and possibly beyond. The Wall Street Journal (WSJ) reports that ‘the recent $900 billion stimulus will “at best only be a down payment” and the now $3.3 trillion of total stimulus spending “is just the beginning,” it sounds like America is headed into a program of permanent stimulus.’ said the WSJ. To fund stimulus, the government does this through increased Treasury security offerings.

Home borrowing costs remained at fresh record lows last week and continue to buoy the housing market. Freddie Mac reports that the 30-year fixed-rate mortgage was at 2.67% with 0.7 in points and fees for the week ended December 31. A year ago at this time, the rate averaged 3.72%. Sam Khater, Freddie Mac’s Chief Economist said, “Heading into 2021 we expect rates to remain flat, potentially rising modestly off their record low, but solid purchase demand and tight inventory will continue to put pressure on housing markets as well as house price growth.”

Courtesy of Mortgage Market Guide 

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