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Daily Rate Update: March 23rd-27th

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Friday – March 27, 2020

The broad shutdown of businesses, due to the virus, across the country is slowing growth and like Fed Chair Powell said yesterday, the U.S. could be in a recession now. However, Mr. Powell went on to say that there could be a ‘good rebound on the other side of this’ and ‘there is nothing fundamentally wrong with our economy.’ Just a little over 20 business days ago U.S. stocks hit all-time highs while business optimism was near all-time highs while the economy was humming along.

Money for nothing, checks for free? Dire Straits – 1985. The massive coronavirus stimulus bill will cover a broad spectrum of the ailing economy but money for nothing, checks for free? Within the bill, it calls for individuals earning a gross adjusted income up to $75,000 a year will be eligible to receive a $1,200 check. Checks will be reduced by $5 for every $100 in income north of $75,000. They phase out completely if you earn $99,000 or more. Married couples earning a gross adjusted income up to $150,000 will receive $2,400. Checks phase out completely at $198,000 for couples. Additionally, married couples will receive $500 per child under 16.

Courtesy of Mortgage Market Guide

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Thursday – March 26, 2020

Due to the recently added liquidity actions by the New York Federal Reserve, the mortgage markets have stabilized a bit after several weeks of depressed prices for mortgage-backed securities. Mortgage rates edged lower with the 30-year fixed-rate mortgage declining to 3.50% this week from 3.65% last week with 0.7 in points and fees. Last year this time the rate was 4.06%. Rates should remain historically low for the foreseeable future due in part to a slowing global economy from the coronavirus fallout.

This morning Federal Reserve Chair Powell said we may well be in a recession right now but there is nothing wrong with the economy. Powell said people are being asked to step back from the economy due to the coronavirus. He went to say that he sees a solid economic rebound due to the fact that the economy was strong right before the virus hit. He also reiterated the Fed will do all it can to battle the current situation. As the saying goes “Don’t fight the Fed.”

The recent carnage that took place in the U.S. stock markets saw the Dow Jones Industrial Average fall 38% from February 12 close of 29,551 to this past Monday’s low of 18,213. The plunge was touched off by the economic fallout from the coronavirus outbreak here in the U.S. Tuesday, Wednesday and Thursday have seen big gains as the Dow has recouped more than 4,000 points or 22% due to the virus stimulus package bill that is working its way to President Trump to be signed, possibly tomorrow. In addition, big QE measures enacted by the Fed are helping to soothe the financial markets.

Courtesy of Mortgage Market Guide

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Wednesday – March 25, 2020

Mortgage rates edged higher for the second week in a row due in part to increased secondary market volatility, lenders coping with volume issues and backlogs in their pipelines, and remote work staffing challenges, reports the Mortgage Bankers Association (MBA). The 30-year fixed-rate mortgage rose to 3.82%, up eight basis points from the previous week to the highest level since mid-January. Mortgage applications declined as rates edged higher. The Market Composite Index fell 29%, Purchase Index fell 15% while the Refinance Index declined 34%. However, rates still remain historically low.

Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting said, “Looking ahead, this week’s additional actions taken by the Federal Reserve to restore liquidity and stabilize the mortgage-backed securities market could put downward pressure on mortgage rates, allowing more homeowners the opportunity to refinance.”

The ongoing coronavirus health problems continue to plague the U.S. with the economic fallout also another major obstacle. In the housing industry, the sector’s biggest trade and lobbying groups have banded together to try to head off mortgage payment delinquencies. With many Americans either laid off or close to being let go, missed mortgage payments could quickly become a major problem. Industry groups have reached out to the government to provide mortgage payment forbearance and longer-term loan modifications to borrowers affected by the coronavirus. Forbearance periods could be from 3 to 12 months.

Courtesy of Mortgage Market Guide

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Monday – March 23, 2020

This morning the Federal Reserve announced it is now committed to “UNLIMITED Quantitative Easing” as it will purchase unlimited amounts of Treasury and Mortgage-Backed Securities, and purchase corporate and municipal debt for the first time, in a historic effort to battle the economic fallout and to restore the financial markets that have suffered due to the coronavirus. The Fed statement read, “The Federal Reserve is committed to use its full range of tools to support the U.S. economy in this challenging time and thereby promote its maximum employment and price stability goals.” The Fed had originally announced a total of “at least” $700 billion.

The Mortgage Banker Association (MBA) reports that mortgage applications to purchase new homes fell 1% month over month from January to February. On a year over year basis, applications were up 26%. The MBA is predicting that New Home Sales to have increased 8% annually in February when the report is released this week on Tuesday. Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. “Looking ahead, there is significant uncertainty regarding how the coronavirus epidemic will impact the housing market, and some of January’s record-level activity could have been attributed to the warmer winter weather, lower mortgage rates, and the tight inventory of existing homes on the market – especially in lower price tiers.”

Coronavirus update: Here in the U.S., there are 35,075 cases, that includes 1,529 new cases with 458 total deaths. There are 351,733 cases of the virus reported worldwide, 15,372 deaths while 100,605 having recovered from the virus. Italy continues to be on total lock down. CDC risk assessment: The immediate risk of being exposed to this virus is still low for most Americans, but as the outbreak expands, that risk will increase. Cases of COVID-19 and instances of community spread are being reported in a growing number of states.

Courtesy of Mortgage Market Guide

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