Daily Rate Update: October 20th-22nd

Tuesday – October 20

The housing sector continues to be a beacon of light for the U.S. housing market which is being fueled by ultra-low rates as well as a shift from the cities to the suburbs. The U.S. Census Bureau and the Department of Housing and Urban Development reports that single-family starts jumped 8.5% monthly and surged 22.3% from September 2019.

Multi-family dwellings fell 14.7% monthly and fell 17.4% annually. Total Housing Starts rose 1.9% in September from August to an annual rate of 1,415,000 units. That was just below the 1,430,000 expected and up from the 1,388,000 in August which was revised lower from 1,416,000. Building Permits came in at 1,533,000 million versus the 1,510,000 million expected.

Stocks are rebounding this morning but are trapped in a stimulus-driven mode as headlines from D.C. continue to hit the airwaves. House Speaker Pelosi and Treasury Secretary Mnuchin are expected to resume talks this afternoon. House Speaker Pelosi is optimistic that a deal can be reached before the election though those hopes are slipping. There is a deadline to strike a deal by the close of business today and if not, a package will come after November 3.

Courtesy of Mortgage Market Guide

Wednesday – October 21

Home borrowing costs remained at record lows in the latest week and continue to buoy the housing sector. The MBA reports that the 30-year fixed-rate mortgage rose two basis points to 3.02% with 0.36 in points and fees. The Market Composite Index, a measure of total mortgage loan application volume, fell 0.6%, the Purchase Index lost 2% while the Refinance Index was essentially unchanged. Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting said, “Given the ongoing housing market recovery and low rate environment, both purchase and refinance applications remained robust compared to a year ago, rising 26% and 74%, respectively.”

Heavy supply, looming stimulus along with a hint of inflation continue to push bond prices lower and yields higher. The Treasury will be selling $22B 20-year T bonds today and $17B TIPS tomorrow as increased added supply will continue to fund the massive stimulus packages that have already been enacted. And with another $2T stimulus deal in the works either before or after the election, supply will continue to impact bond prices. U.S. stocks are mixed as investors await any news on a stimulus package. With the general election just two weeks away, a stimulus deal could come after November 3.

Courtesy of Mortgage Market Guide