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Daily Rate Update: March 30th-April 3rd

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Friday – April 3, 2020

The coronavirus fallout continues to impact the U.S. economy and will continue for several months. The March Jobs Report showed 701,000 jobs lost, far below expectations and just the first in what will be a string of historic job losses. Based on nearly 10 million unemployment claims the last two Thursdays, the unemployment rate is already closer to 10%, rather than the 4.4% that was reported this morning.

There are some Wall Street firms reporting 47 million jobs will be lost and unemployment will hit 32% before the economy can possibly turn the corner once the virus is contained here in the U.S. The loss of 701,000 jobs in March was the first time the economy lost jobs since September 2010 and the worst month for American jobs since 2009, the height of the Great Recession.

Coronavirus update: Here in the U.S., there are 245,442 cases of the virus that includes 565 new cases with 6,098 total deaths. There are 1,034,170 cases of the virus reported worldwide, 54,465 deaths while 223,025 having recovered from the virus.

Courtesy of Mortgage Market Guide

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Thursday – April 2, 2020

The economic fallout from the coronavirus continues to hit American workers across the nation. Americans filing for first-time unemployment claims hit nearly 6.7 million last week after the 3.3 million in the previous week. These are record numbers in the history of modern-day America. The St. Louis Federal Reserve is forecasting 47 million to go unemployed with a 32% unemployment rate in the upcoming months. However, the St. Louis Fed went on to say that once the coronavirus is behind us we could see a swift gain in jobs.

Freddie Mac reports that mortgage rates fell in the latest survey but the data could be a bit stale given how fast rates have moved in the past few weeks. The 30-year fixed-rate mortgage fell to 3.33% with 0.7 in points and fees. Despite the low rates, potential homebuyers are staying away from the market given the current coronavirus environment. Today’s rates are most likely higher in this volatile environment.

After plunging in the past month due to weak demand and oversupply, oil prices gushed higher after the White House reported that Russia and Saudi Arabia have come to an agreement to cut production. West Texas Intermediate oil hit $27/barrel after the headlines hit, up from the $20 close seen yesterday. The slump in oil prices has pushed shares of energy companies lower which in turn has cast a negative vibe throughout the broader markets.

Courtesy of Mortgage Market Guide

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Wednesday – April 1, 2020

Mortgage rates plunged in the latest survey from the Mortgage Bankers Association due to the uncertainty caused by the coronavirus. The 30-year fixed-rate mortgage fell to 3.47% from 3.82% with 0.33 in points. Low rates pushed Market Composite Index higher by 15.3%, which is total mortgage application volume. The Refinance Index rose 25.5% while the Purchase Index fell 11%. Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting said, “Buyer and seller traffic – and ultimately home purchases – will also likely be slowed this spring by the restrictions ordered in several states on in-person activities.”

The coronavirus is not only impacting the health of thousands of Americans, but it is also impacting the U.S. economy. With the shutdown of many businesses across the nation, economic growth will most likely suffer in the coming months. Goldman Sachs is out forecasting -34% Gross Domestic Product (GDP) in Q2 with a 15% unemployment rate. However, the investment bank sees a 19% increase in GDP in Q3. This would represent a V-Shaped recovery. In addition, a longer-term increase in unemployment would be detrimental to the housing sector.

Payroll growth in the private sector was less bad than expected last month but the coming months will probably see more severe data. ADP Private Payrolls saw losses of 27,000 jobs, well above the loss of 175,000 expected. Today’s report covers up until March 12, before the shutdown began. Job losses are expected to be massive in the coming months. The report comes ahead of the government’s Jobs Report on Friday morning.

Courtesy of Mortgage Market Guide

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Tuesday – March 31, 2020

Home prices edged higher though the data was backward-looking in the January S&P Case-Shiller 20-City Home Price Index. Home prices rose 3.1% from January 2019 to January 2020, up from 2.8% the previous month as prices continued to increase at a modest rate across the U.S. The National Index saw an increase of 3.9%. On a monthly basis, prices for both the 20-City and National Index were flat. A spokesperson said, “The COVID-19 pandemic did not begin to take hold in the U.S. until late February, and thus whatever impact it will have on housing prices is not reflected in today’s data.”

As expected, consumer confidence fell in March to levels seen in July 2017 as fears of the coronavirus spread throughout the country. The Consumer Confidence Index fell to 120.0 in March, down from 132.6 in February but not as bad as the 110.0 that was expected. Within the report, the expectations component, which reflects consumers’ short-term outlook, plunged 18%. Lynn Franco, Senior Director of Economic Indicators at the Conference Board said, Marches’ decline in confidence is more in line with a severe contraction – rather than a temporary shock – and further declines are sure to follow.”

The volatile month and quarter come to an end today that saw U.S. stocks hit all-time highs in mid-February only to lose a huge chunk of gains once the coronavirus hit the U.S. The closely watched S&P 500 hit an all-time closing high of 3,386 on February 19 only to fall off a cliff in a little over a month. The S&P has lost 19% since the close of trading on December 31. Slowing global growth due to the coronavirus along with most small businesses shuttered from the stay-at-home order have decimated consumer spending which could lead to a few weak quarters of Gross Domestic Product.

Courtesy of Mortgage Market Guide

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Monday – March 30, 2020

The housing market received some positive news today for the month of February but the numbers were prior to the coronavirus shutdown. The National Association of REALTORS reports that Pending Home sales rose 2.4% in February from January and above the -1.6% expected. Annually, the index was up 9.4%. Each of the four major regions of the U.S. saw an increase month-over-month. Lawrence Yun, NAR’s chief economist said, “Numbers in the coming weeks will show just how hard the housing market was hit, but I am optimistic that the upcoming stimulus package will lessen the economic damage and we may get a V-shaped robust recovery later in the year.”

With demand for oil declining and with over supply, the price for oil has hit low levels seen back in 2002. West Texas Intermediate oil fell to $19.85 a barrel today as widespread lock downs in Europe and North America have slashed oil demand. The average price for a regular gallon of gasoline has fallen to $2.01 on Monday, down from $2.44 a month ago and below the $2.69 see last year this time. Motor club AAA sees the price for gas to fall even lower as demand for gasoline diminishes as Americans stay at home.

Coronavirus update: Here in the U.S., there are 142,793 cases that includes 333 new cases with 2,490 total deaths. There are 738,453 cases of the virus reported worldwide, 35,004 deaths while 156,306 having recovered from the virus. Italy continues to be on total lock down.

Courtesy of Mortgage Market Guide

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