Family and housing in 2020

Daily Rate Update: June 8th-12th

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Friday – June 11, 2020

Consumers were more hopeful of a recovery to the U.S. economy in the early part of this month as many states reopened and the employment picture for May showed signs of a turnaround. Consumer Sentiment rose to 78.9 in from 72.3 in May, it’s second monthly gain. However, few consumers anticipate the reestablishment of favorable economic conditions anytime soon. “The damage done by this coronavirus to our economy has been extensive — we haven’t yet dealt with the small business firms that are going to go out of business and the many households that haven’t made mortgage or rent payments in a while,” said Richard Curtin.

After suffering their worst day since mid-March, investors are pushing stocks higher today after booking profits the past three trading days. Pullbacks are not just common after big gains, but welcome and needed … especially after the S&P rose nearly 45% from the March 23 lows. The Dow Jones Industrial Average is up 300 points. The bond markets are seeing lower prices, higher yields as the volatile week comes to a close.

Courtesy of Mortgage Market Guide

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Wednesday – June 10, 2020

The MBA reports that mortgage rates were unchanged in the latest week and remain near record lows. The 30-year fixed-rate mortgage was unchanged at 3.38% with 0.30 in points. The MBA went on to report that the Market Composite Index rose 9.3%, the Purchase Index was up 5.3% while the Refinance Index surged 11.4%. Purchase activity increased for the eighth straight week and was a notable 13% higher than a year ago,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting.

It’s Fed Day! Federal Reserve members will release the monetary policy statement at 2:00 p.m. ET accompanied by a set of economic projections with Fed Chair Powell holding a press conference at 2:30. There is a zero chance of a rate change to the Fed Funds Rate. The Fed may provide more of a backstop to help the economy and that is likely something that will be shared in the statement and subsequent press conference. The Fed’s current balance is $7T and it will likely go much higher.
The current enhanced unemployment benefits are due to expire at the end of July. So on top of the Fed doing more, expect the Treasury to also do more.

Courtesy of Mortgage Market Guide

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Tuesday – June 9, 2020

Small business optimism rebounded in May as many states continue to reopen their respective economies. The NFIB Small Business Optimism Index rose 3.5 points in May to 94.4, a strong improvement from April’s 90.9 reading as businesses begin to reopen. In addition, the NFIB reported that owners are optimistic about future business conditions and expect the recession to be short-lived. “As states begin to reopen, small businesses continue to navigate the economic landscape rocked by COVID-19 and new government policies,” said NFIB’s Chief Economist Bill Dunkelberg.

The Mortgage Bankers Association (MBA) reports that those properties in forbearance due to COVID-19 has risen to 8.5% to nearly 4.3 million at the end of May. That is up from 4.2 million in the previous week. Breaking it down, private-label loans led rose to 10% share from 9.67%, mortgages backed by Fannie Mae and Freddie Mac increased to 6.4% while the percentage for loans backed by the FHA and the Veterans Administration rose to 11.83% from 11.82%. “With the job market beginning to gradually improve, more homeowners are exiting forbearance, and we are seeing declines in forbearance volume among some servicers,” Fratantoni said.

Courtesy of Mortgage Market Guide

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Monday – June 8, 2020

The trend from last week continues – stocks are higher, the dollar is lower, oil and bond yields remain near the highest levels in months. After Friday’s blistering Jobs report and the subsequent surge in stock prices, this week the rally continues with the S&P (3,193) closing in on its all-time closing high (3,386) hit on February 19.

The Federal Reserve continues to underwrite the recovery and will use whatever means necessary to help the economy grow without hot inflation. A weaker dollar makes our exports cheaper to the world which is a positive for stocks and since mid-April, the greenback has been on a steady decline – this in response to the enormous stimulus measures.

Courtesy of Mortgage Market Guide

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