Daily Rate Update: September 21-25

Monday – September 21  

U.S. stock markets are plunging as the week kicks off due in part to fears of a second wave of the coronavirus this fall, political uncertainty along with no stimulus deal yet reached in Congress. The Dow Jones Industrial Average has been down over 800 points in early trading. Several big global banks are being found to move illicit funds or launder money over the course of 20+ years.

The week is short on economic data with just a few housing reports to be released. August Existing Home sales and New Home Sales are set to be delivered. The Treasury will be selling a total of $155B in Notes this week and the added supply could weigh on bond prices. Next week the markets will see the September jobs numbers to gauge if the labor market will continue to improve after extreme low unemployment at the beginning of the year only to see the bottom fall out during the height of the pandemic.

Courtesy of Mortgage Market Guide

Tuesday – September 22  

The housing market continues to produce solid gains as the U.S. economy tries to return to the strong environment seen pre-coronavirus. The National Association of REALTORS® reports that Existing Home Sales rose 2.4% in August from July to an annual rate of 6 million units. Sales were up 10.5% year over year and were the highest sales pace since December 2006.

Existing Home Sales include single-family homes, townhomes and condominiums and co-ops. Sales were up in all four major regions of the country. The median price in August was $310,600, up 11.4% from August 2019. Unsold inventory sits at a 3-month supply, well below the 6 months that is seen as normal. Lawrence Yun, NAR’s chief economist said, “Further gains in sales are likely for the remainder of the year, with mortgage rates hovering around 3% and with continued job recovery.”

Homeowner equity continues to increase as home price gains continue throughout the country. CoreLogic reports that U.S. homeowners with mortgages saw their equity increase by a total of nearly $620 billion from Q2 2019 to Q2 2020, a gain of 6.6%. In addition, homeowner equity has soared by over $6 trillion in the past 10 years. CoreLogic went on the further report that ‘negative equity share for Q2 2020 was 3.2% of all homes with a mortgage, the lowest share of homes with negative equity since CoreLogic started tracking it in the third quarter of 2009.’

Courtesy of Mortgage Market Guide

Wednesday – September 23  

Home borrowing costs continued to hover near record lows in the latest week which is buoying the housing market. The Mortgage Bankers Association (MBA) reports that the 30-year fixed-rate mortgage rose three basis points to 3.10% with 0.46 in points. The MBA went on to report that the Market Composite Index rose by 6.8%, the Refinance Index gained 9% while the Purchase Index rose 3%. Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting said, “The strong interest in homebuying observed this summer has carried over to the fall.”

Positive housing data continues to stream in anchored by low mortgage rates and as the nation continues to reopen. The FHFA reports that house prices rose 6.5% from July 2019 to July 2020 and were up 1% monthly in July. For the nine census divisions, seasonally adjusted monthly house price changes from June 2020 to July 2020 ranged from +0.6% in the West North Central division to +2.0 percent in the New England division. Dr. Lynn Fisher, FHFA’s Deputy Director said, “The dramatic increase in prices this summer can be attributed to the historically low interest rate environment and rebounding housing demand even as the supply of homes for sale remains constrained.”

Courtesy of Mortgage Market Guide