Daily Rate Update: June 22nd-26th

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Friday – June 26, 2020

Consumer Sentiment continues to rebound in June after the steep decline seen in April from March. After the 89.1 seen in March, April fell to 71.8 while June hit 78.9. The numbers in the second half of June declined somewhat as consumers saw the reopening improve the labor market at a probable cost of a rise in COVID-19 cases. The report went to reveal that with the recent resurgence of the virus could lead to weaker consumer spending.

In economic news, inflation as measured by the Core PCE, came in at 1% year over year – half of the Fed’s 2% target. Before the coronavirus, the Fed was talking about abandoning the 2% target with one that floats higher before hiking. This makes sense and if that is the case – don’t expect a rate hike for a few years. Personal Spending spiked as state economies reopened. As expected, Personal Incomes fell. The data had little impact on the markets.

Courtesy of Mortgage Market Guide

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Thursday – June 25, 2020

The U.S. saw its biggest daily rise in daily coronavirus cases on Wednesday, two months after the previous record with the resurgence mainly hitting in the South and West. The threat is seen that new infections could curtail the recent reopening of state economies if the pandemic worsens. However, stocks are near unchanged after yesterday’s steep losses. The huge rally since the March lows seems to be stalling at current levels as the smart money may be looking to take some profits.

Americans filing for first-time unemployment benefits continue to decline but still remain at unusually large levels due to the pandemic induced shutdown of the U.S. economy. Weekly Initial Jobless Claims came in at 1.48 million versus the 1.35 million expected and down from 1.540 million in the previous week. Continuing Claims fell to 19.522 million from 20.289 million in the previous week. Durable Orders jumped to 15.8% in May from -18.1% in April as economic data continues to rebound from the weak March and April numbers. Final Q1 GDP remained at -5.0%.

Mortgage rates remained at all-time lows in the latest week as the Federal Reserve continues to purchase mortgage-backed-securities on a daily basis in an effort to stabilize the market. Freddie Mac reports that the 30-year fixed-rate mortgage remained at 3.13% with 0.8 in points and fees. Freddie Mac said that after the Great Recession, it took more than ten years for purchase demand to rebound to pre-recession levels, but in this crisis, it took less than ten weeks. The rebound in purchase demand partly reflects deferred sales as well as continued interest from prospective buyers looking to take advantage of the low mortgage rate environment.

Courtesy of Mortgage Market Guide

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Wednesday – June 24, 2020

Mortgage rates continue to hover near all-time lows though inventory concerns continue to plague the market. The MBA reports that the 30-year fixed-rate mortgage was unchanged in the latest week at 3.30% with 0.32 in points. The report went on to reveal that the Market Composite Index, a measure of total mortgage loan application volume, fell 8.7%, the Purchase Index fell 3% while the Refinance Index lost 11.7%. Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting said, “One factor that may potentially crimp growth in the months ahead is that the release of pent-up demand from earlier this spring is clashing with the tight supply of new and existing homes on the market.”

New tariff issues between the U.S. and Europe and enormous supply from the Treasury are leaving both stocks and bonds modestly lower to start the day. The Treasury will sell $47 billion 5-year Notes today, part of $134 billion being offered this week and comes after yesterday’s solid demand for the 2-year offering. A proposed $3.1B in tariffs from the White House on goods coming from Europe and the U.K. into the U.S. is pushing stocks lower today along with an uptick in global coronavirus cases. The ongoing pandemic still remains a real and valid concern across the country.

Courtesy of Mortgage Market Guide

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Tuesday – June 23, 2020

New Home Sales unexpectedly surged by 16.6% in May from April to an annual rate of 676,000 units versus the 635,000 expected. However, April’s number was revised lower to 580,000 from 623,000. From May 2019 to May 2020 sales rose 12.7%. Sales rose in the Northeast, South and West while the Midwest declined. The median sales price was $317,900 while inventories are at a 5.6-month supply. Many housing pundits feel that the housing sector has bottomed out as states reopen. The New Home Sales report shows the number of newly constructed single-family homes.

As more and more states reopen for business, the housing sector should continue to prosper given the low rate environment and with pent-up demand from the near three-month shutdown of the economy. The MBA reports that total lending for home purchases and mortgage refinancings probably will total $2.65 trillion this year, the most since the $2.74 trillion seen 14 years ago, due in part to low rates. The MBA went on to say that many would-be buyers were shut out in April due to many stay-at-home measures along with first-time buyers seeking low rates.

Courtesy of Mortgage Market Guide

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Monday – June 22, 2020

Existing Home Sales, which includes single-family homes, townhomes, condominiums and co-ops, fell nearly 10% from April marking a three-month decline as a result of the fallout of the coronavirus outbreak. The annual rate fell to 3.91 million annualized units from 4.33 million seen in April. From May 2019 to May 2020, sales fell 26.6%. Sales fell across the Northeast, South, Midwest and West. Lawrence Yun, NAR’s chief economist said, “Home sales will surely rise in the upcoming months with the economy reopening, and could even surpass one-year-ago figures in the second half of the year.”

The coronavirus economic fallout continues to impact U.S. households as many struggle to pay their bills. Black Knight reports that the mortgage delinquency rate rose to 7.76% in May from 6.45% in April and 3.39% in March. There were 4.12 million mortgages in the U.S. that had payments more than 30 days overdue in May, reports Black Knight. The state with the highest rate was Mississippi at 12.73% while Idaho had the lowest at 4.4%. Serious delinquencies or mortgages that are 90 days past due but not yet in foreclosure, rose by more than 50% over the past two months to 631,000.

Courtesy of Mortgage Market Guide

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