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Daily Rate Update: May 18th-22nd

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Thursday – May 21, 2020

Nearly 39 million Americans have lost their jobs in the past nine weeks due to the economic shutdown. However, with many states reopening, Memorial Weekend upon us and the American spirit ready to go – the market response to the weak data is muted. Weekly Initial Jobless Claims came in at 2.438 million for the week ended May 16 while the previous week was lowered to 2.687 million from 2.981 million. The numbers have fallen since the record 6.867 million filed on Mach 27. This means with 157 million people in the U.S. workforce in February, nearly 25% of the workforce is without a job.

Mortgage rates remained near record lows in the latest week, reports Freddie Mac. The 30-year fixed-rate mortgage came in at 3.24% this week with 0.7 0n points and fees. Freddie Mac says as states reopen, we’re seeing purchase demand improve remarkably fast, now essentially flat relative to a year ago. Going forward, mortgage rates have room to decline as mortgage spreads remain elevated.

Sales of existing homes plunged in April and year over year as the pandemic impacted sales. Existing Home Sales fell nearly 18% month-over-month and down 17% from April 2019 to an annual rates of 4.33 million units. The 4.33 million units was the lowest annual pace since September 2011. Housing inventories stand at a 4.1 month supply. “The economic lockdowns – occurring from mid-March through April in most states – have temporarily disrupted home sales,” said Lawrence Yun, NAR’s chief economist. “But the listings that are on the market are still attracting buyers and boosting home prices.”

Courtesy of Mortgage Market Guide

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Wednesday – May 20, 2020

Mortgage rates remained near record lows in the latest week during the uncertain times caused by the coronavirus pandemic. The Mortgage Bankers Association (MBA) reports that the 30-year fixed-rate mortgage was at 3.41% with 0.33 in points for the week ended May 15, 2020. The MBA’s Market Composite Index, a measure of total mortgage loan application volume, fell 2.6%. The Refinance Index fell 6% while the Purchase Index rose 6%.

Easing state lock downs, hopes for better economic times ahead and incredible support by the Fed, Treasury and Congress are boosting the major U.S. stock indexes today. This comes after Monday’s huge gains and yesterday’s declines. In addition, solid earnings from Lowe’s is also boosting sentiment today. The closely watched S&P 500 is up 30% from the March 23 low but has been stalling lately states reopen along with the instance of new cases.

For the first time since its inception 20 years ago, motor club AAA will not release its Memorial Day travel forecast, as the accuracy of the economic data used to create the forecast has been undermined by COVID-19. With gas prices at $1.90 for regular at the pumps, and below last year’s $2.85, drivers would have had more money to spend during the Memorial Day weekend. “Gas prices around Memorial Day have not been this cheap in nearly 20 years. However, as the country continues to practice social distancing, this year’s unofficial kick-off to summer is not going to drive the typical millions of Americans to travel,” said Jeanette Casselano, AAA spokesperson.

Courtesy of Mortgage Market Guide

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Tuesday – May 19, 2020

The pandemic outbreak sent shock waves throughout the U.S. economy in March and April with the housing sector not immune from the carnage. The Commerce Department reports that April Housing Starts plunged 30.2% from March to an annual rate of 891,000 units. It was the lowest level of starts since 2015 while the percentage loss was the lowest on record dating back to 1959. Starts fell 29.7% from a year ago while all four major U.S. regions saw big losses. Single-family starts declined by 25.4% monthly and 24.8% annually. Multi-family unit construction fell 40% monthly and 38% annually.

To support borrowers and mortgage servicers, the Federal Housing Finance Agency (FHFA) announced that Fannie Mae and Freddie Mac have issued temporary guidance regarding the eligibility of borrowers who are in forbearance, or have recently ended their forbearance, looking to refinance or buy a new home. Borrowers are eligible to refinance or buy a new home if they are current on their mortgage (i.e. in forbearance but continued to make their mortgage payments or reinstated their mortgage). Borrowers are eligible to refinance or buy a new home three months after their forbearance ends and they have made three consecutive payments under their repayment plan, or payment deferral option or loan modification.

Fannie Mae says that given its low-interest rate forecast and incoming data, it has upgraded its refinance originations forecast by $119 billion to $1.5 trillion in 2020, a 51% jump from 2019. Mortgage rates could potentially fall below 3% by the start of 2021. Fannie Mae said that housing was a bright spot in the first quarter, with residential fixed investment posting the largest annualized gain since 2012, but disruptions from the coronavirus are now severely impacting the sector. Listings of single-family for-sale homes fell sharply year over year in April, as potential sellers delayed putting their homes on the market.

Courtesy of Mortgage Market Guide

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Monday – May 18, 2020

Promising trial tests from drug-maker Moderna for a coronavirus vaccine is lifting U.S. stocks to begin the week. The Dow Jones Industrial Average was up 900 points in early trading on the news. In addition, positive words on the U.S. economy from Fed Chair Powell on Sunday night on 60 minutes is also adding to the lofty gains. The Dow is now up 34% from the closing low seen on March 23. The yield on the 10-year Note has risen to .70% as risk-on is today’s trade.

Home builder confidence edged higher in May after the historic drop in April due to the coronavirus fallout that closed most state economies across the nation. The NAHB Housing Market Index rose seven points to 37 in May, up from 34 in April though below 50, where 50 is the diving line between positive and negative. All six of the components within the index posted gains in May. Oil prices continue to gush higher with West Texas Intermediate oil at $32/barrel as the market eyes future higher demand in the coming months as countries slowly reopen. In addition, output cuts are also helping to boost prices. With the rise of oil prices in May, prices at the pumps are on the rise. The national average prices for a regular gallon of gasoline is at $1.87, up from $1.82 a month ago though well below the $2.58 a gallon seen last year this time. At the start of the Memorial Day work week, the national gas price average is $1.87. The last time the national gas price average leading into the holiday was under $2/gallon was 17 years ago in 2003, reports AAA.

Courtesy of Mortgage Market Guide

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