Daily Rate Update: October 5th – 9th

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Monday – October 5  

After being decimated during the pandemic-induced shutdowns in late March, April and May, the service sector continues to rebound across the nation. The ISM Service Index rose to 57.8 in September from 56.9 in August and above the 57.3 seen pre-pandemic in February. ISM spokesperson Anthony Nieves said, “Respondents’ comments remain mostly optimistic about business conditions and the economy, which correlates directly to those businesses that are operating.”

On Capitol Hill, the White House reports that the health of President Trump has improved to the point that he may get discharged from Walter Reed Hospital as early as today. Hopes of a fourth stimulus package is gaining steam in D.C. as millions of Americans await aid from the government. Hopefully, Congress can come together and agree on an aid package after House Speaker Pelosi says lawmakers are making progress while President Trump says “get it done.”

Courtesy of Mortgage Market Guide

Tuesday – October 6  

The housing sector continues to produce positive headlines due in part to low rates along with an improving labor market. CoreLogic reports that home prices, including distressed sales, rose 5.9% from August 2019 to August 2020. It was the highest level since June 2018. Monthly, prices rose 1% from July to August. In addition, lower supplies of homes on the market for sale is also helping to boost prices. Frank Martell, president and CEO of CoreLogic said, “With heightened activity putting a strain on the current for-sale inventory, strong demand should help spur new homebuilding activity.”

News that a stimulus package may be in the works along with President Trump being discharged from Walter Reed Hospital buoyed positive sentiment across global equity markets. House Speaker Nancy Pelosi and Treasury Secretary Mnuchin spoke yesterday on a coronavirus relief package and will resume talks today. Members of Congress know that many Americans need an aid package. An aid package should be passed to help those truly in need. President Trump was released from the hospital last night saying that he feels fine though of course not out of the woods completely.

Fed Chair Powell will be made comments on the U.S. economy this morning in front of the National Association of Business Economists in D.C. Powell said the risk that the pace of rapid recovery could slow. Mr. Powell went on to say that the recovery will be stronger if fiscal and monetary policy work together which equates to more stimulus needed from Congress. In conclusion, the Fed Chair said financial markets have returned to normal functioning while the economic outlook is highly uncertain and depends on the course of virus.

Courtesy of Mortgage Market Guide

Wednesday – October 7  

Mortgage rates continued to remain at record low levels in the latest survey while mortgage application activity increased. The MBA reports that the 30-year fixed-rate mortgage fell by four basis points to 3.01% with 0.37 in points for the week ended October 2, 2020. The Market Composite Index, a measure of mortgage loan application volume, rose 4.6%. The Refinance Index gained 8% while the Purchase Index declined 2%. The MBA’s Joel Kan said, “Continuing the trend seen in recent months, the purchase market is growing at a strong clip, with activity last week up 21 percent from a year ago.”

Fannie Mae released its Home Purchase Sentiment Index (HPSI) for September revealing that the rapid housing recovery continues as mortgage rates remain near historic lows. The HPSI rose 3.5 points in September to 81.0. Consumers reported a significantly more positive view of home-selling conditions, anticipated home price growth, and the labor market, but a more pessimistic view of homebuying conditions and mortgage rate expectations. Doug Duncan, Senior Vice President and Chief Economist said, “Consumers’ home price expectations were up strongly this month, with high home prices playing an increasingly – though unsurprisingly – important role in driving both the increase in ‘good time to sell’ sentiment and the decline in ‘good time to buy’ sentiment.”

Courtesy of Mortgage Market Guide

Thursday – October 8  

Home borrowing costs remained at low levels in the latest survey and continue to buoy the housing market. Freddie Mac reports that the 30-year fixed-rate mortgage was essentially unchanged this week at 2.87% with 0.8 in points and fees. A year ago at this time, the rate averaged 3.57%. “The year-long slide in mortgage rates seems to be ending as rates have flattened over the last month and the economic rebound has slowed,” said Sam Khater, Freddie Mac’s Chief Economist. “But with near record low rates, buyer demand remains robust with strong first-time buyers coming into the market. The demand is particularly strong in more affordable regions of the country such as the Midwest, where home prices are accelerating at the highest rates over the last two decades.”

Americans filing for first-time unemployment benefits continued to run stubbornly high in the latest week. Weekly Initial Jobless Claims came in at 840,000 for the week ended October 3, down from the 849,0000 in the previous week. The 840,000 is well below the 6 million seen in late March and early April at the height of the pandemic. Continuing claims, which measures those receiving benefits for at least two weeks straight, fell to 10,976,000 from 11,979,000.

Courtesy of Mortgage Market Guide

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