March 2020

March 2020

Average Mortgage Rates





Mortgage News Daily 3/31/2020

30 Yr. Fixed




15 Yr. Fixed




30 Yr. Jumbo





Instructions on how to read this blog: Below is the news for the month when it happened and the market’s reaction.  For a full view of the month start at the bottom and work your way up. If want to know what just happened start at the top. All Times are Eastern Standard Time.  When the price of Mortgage Backed Securities (MBS) goes down rates go up, and when the price goes up rates come down. Remember in the bond market Bad News is Usually Good News and Good News is Usually Bad news.

Tuesday - March 31  

Market Wrap - Another day of wide range trading patterns for Mortgage Bonds as the market continues to be influenced by the Fed's recently enacted bond purchase program. Mortgage Bond prices ended mostly lower as the Fed pulls back on purchases. Treasury prices ended near unchanged with the 10-yr yield settling at .66%. Stocks closed lower today. The Dow and S&P had their worst first quarters in history. WTI oil closed at $20.52/barrel, +$0.41

Late Morning Review - 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 Ptroduct.


Monday - March 30  

Market Wrap - The Fed continued to impact the mortgage markets today with its early morning buying giving way to selling once the Fed completed its daily operations. Mortgage Bonds closed lower after lofty gains early on. The 10-yr yield closed at .72%. Stocks rallied with the health care sector leading the way. The Dow ended with a near 700 point gain. WTI oil was last seen at $20.35/barrel, -$1.16. Consumer Confidence and the S&P Case Shiller Home Price Index will be released tomorrow. 

Late Morning Review - 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.




Forecast for the Week -  Expect the recent extreme volatility to likely continue this week, but probably to a lesser extent with the Fed stepping in to stabilize the U.S. financial markets.

In addition, the massive stimulus bill enacted by Congress may help to soothe the nerves of many Americans who were hurt both physically and financially from the coronavirus.

Economic reports may not be market movers this coming week as everyone is expecting negative readings everywhere, especially in the labor market. Weekly initial jobless claims, ADP Private Payrolls for March, and the closely watched Jobs Report for March will reveal the initial economic impact of the coronavirus.

The two questions that will be front and center for mortgage professionals in the upcoming week, addressed in the above "Week in Review," will be: has the mortgage market stabilized, and what is the path for rates for the foreseeable future?  

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Friday - March 27  

Week in Review-  This past week, thanks to the Federal Reserve, home loan rates declined. The high uncertainty around the coronavirus and its impact on homeowners and mortgage payments created a dire need for liquidity in the mortgage-backed security (MBS) market.

This is where the Fed came to the rescue by providing liquidity.

What is liquidity?

Liquidity describes the degree to which an asset or security can be quickly bought or sold in the market at a price reflecting its intrinsic value. In other words, it's the ease of converting it to cash.

Last Sunday, the Fed announced that it would purchase an unlimited amount of MBS in order to provide the much-needed liquidity to get the MBS market to perform correctly.

As a result, MBS prices showed more normal trading activity which resulted in lower rates and more stable pricing this week.

We expect more stabilization in the days and weeks to come as the Fed is committed to getting the MBS market to function as normal.

Bottom line: the Fed's unlimited MBS buying doesn't mean home loan rates are going to improve much further, but it will rather stabilize the market and keep rates near current levels, affording homeowners the ability to refinance and secure a low home loan rate.

If you or someone you know has questions about home loans, give me a call. I'd be happy to help.


Late Morning Review - 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.


Thursday - March 26

Late Morning Review - 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.

8:30 am ET Weekly Initial Jobless Claims soar to 3.283 million!


Wednesday - March 25  

Market Wrap - Mortgage Bonds traded in another wide range today as the Fed buying impacted the seesaw trading though prices ended the day in negative territory at session lows. Treasury prices ended lower as the massive fiscal plans nears approval in Washington. The 10-yr yield settled at .86%. Stocks ended higher though off best levels after some snags in the coronavirus stimulus bill. WTI oil was last seen at $24.29/barrel, +$0.27. 

Late Morning Review - 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.

Tuesday - March 24

Market Wrap - The major U.S. stock indexes soared today as the Dow (20,704) had its largest daily point gain ever (+2,112) and its largest percentage gain (11.2%) since 1933. The 10-yr yield settled at .84%. WTI oil was last seen at $24.01/barrel, +$0.66. More of the same volatility will continue this week. Durable Orders will be released tomorrow. The Treasury will sell $41B 5-yr Notes. Per our Voice Broadcast alert - today was pretty similar to yesterday where Mortgage Bonds closed well off their best levels after the Fed completed its daily purchases of mortgage-backed securities. We should expect to see Mortgage Bonds continue to get propped up during these Fed buys and hopefully we get to see some stabilization in the not too distant future.

Monday - March 23  

Market Wrap - Volatility continued today with big swings seen for Mortgage Bonds as they ended well off the session highs after the Fed completed its daily mortgage-backed security purchases late afternoon. The 10-yr yield settled at .76%. Stocks fell after Congress failed to advance the coronavirus stimulus bill for the second time in 24 hours. WTI oil was last seen at $23.78/barrel. +$1.15. New Home Sales will be released tomorrow. The Treasury will sell $40B 2-yr Notes.

Late Morning Review - 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.

Forcast for next week - The upcoming week will be primarily focused on the continued fallout from the coronavirus, after we saw jobless claims spike last week, while a key regional manufacturing report saw its worst reading since 2009.

Investors will be looking for a bottom in Stocks while also looking for an end to the declining prices for Mortgage Bonds.

Mortgage rates jumped last week, though they remain just above historic lows. The increase in rates was due in part to lenders increasing prices to help manage skyrocketing refinance demand, reported Freddie Mac.

Extreme volatility will continue as the markets deal with the coronavirus, central bank intervention, along with massive government stimulus plans.       





Week in Review - This past week, home loan rates ticked up again despite the Fed recently cutting rates by a full point and the 10-year Note remaining just above 1%.


Mortgage backed securities (MBS) are Bonds that price home loan rates. This week, the spread or difference in yield between the 10-year Note and MBS spiked to the highest level in decades. This means that despite the record low yield in Treasuries, home loan rates continue to rise.

This has to do with MBS investors having less of an appetite for MBS, given the uncertainty of the current economic environment. The only way you can attract investors to buy MBS is by increasing the interest rate or yield to the investor. We are seeing this today.

Also, there is a reality that $1T in Bonds will be coming to the Bond market in the near future to pay for the economic stimulus package in order to help the economy during and after this coronavirus crisis. That huge amount of new Bond supply dilutes the Bond market and pressures prices lower and rates higher.

We may not see a more natural interest rate spread between Treasuries and MBS until we get past the worst of the coronavirus and its economic impact. Until then, expect more price and rate volatility.

Bottom line: home loan rates remain very close to the best levels ever, and with the Fed buying MBS for the foreseeable future, we are not expecting home loan rates to go too high any time soon.

If you or someone you know has questions about home loans, give me a call. I'd be happy to help.

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Friday - March 20  

Market Wrap - The roller coaster ride continued today for Mortgage Bonds as sellers had the upper hand early on while Fed buying lifted prices in the afternoon to close with strong gains. Stocks declined and had their worst week since October 2008 as the coronavirus issues stunt economic growth. The 10-yr yield settled at .88%. WTI oil was last seen at $22.43/barrel, -$5.38.  The close above the 200-day Moving Averages was also a positive sign. Let's see if Mortgage Bonds can build on this after the weekend and trade in more normal fashion thanks to Fed intervention. Have a great weekend!

Late Morning Review - The National Association of REALTORS reports that Existing Home Sales rose 6.5% in February from January and was the strongest reading since February 2007. Sales rose 7.2% from a year ago. The median price was $272,100, up 8% from February 2019. Inventories are at a low 3.1 months, well below 6 months that is seen as normal. First-time buyers were responsible for 32% of sales in February.

Due to the fallout from the coronavirus that has sent many Americans to the unemployment lines there are several measures that are currently being undertaken to help struggling homeowners. The Bank of America will be allowing mortgage holders and equity customers to request to defer payments while the virus crisis with the deferred payment being added to the end of the loan. Fannie Mae and Freddie Mac will suspend foreclosures and evictions for at least 60 days. In addition, New York State will let some residents skip three months of mortgage payments as the coronavirus spreads.



Fri, Mar 20 8:40 AM
Fed taking more extreme measures today buying up to $32B in Mortgage Bonds starting at 9am. The Fed said this in their statement, "These purchases are intended to address highly unusual disruptions in the market for agency MBS associated with the coronavirus outbreak. These operations are part of the at least $200 billion of agency Mortgage-Backed Securities the FOMC directed the Desk to purchase in support of the smooth functioning of markets for agency MBS.


Thursday - March 19  

The Mortgage Bond market just saw the last prices in what was a hectic session. We just watched the 3% Coupon gain 150bp in the last 45 minutes of trading and close right on its 200-day MA. We will see what tomorrow brings - but that was an impressive recovery in what has been a one sided trade lower the past two days. Maybe we found a bottom in the sell-off today, and rate will improve today.

200319 329 ET


Late Morning Review - Mortgage rates surged this week as lenders increased prices to help manage skyrocketing refinance demand, reports Freddie Mac. The 30-year fixed-0rate mortgage rose to 3.65% from 3.36% last week. A year at this time, the rate was 4.28%. This is expected to be a short-term phenomenon as lenders work through their backlog,” said Sam Khater, Freddie Mac’s Chief Economist. “On the purchase front, daily loan purchase applications were rising as of mid-February but started to decline last Friday.”

The first sign of the coronavirus fallout hit the labor market this morning as Weekly Initial Jobless Claims spiked 70,000 to 281,000 for the week ended March 14. Many states across the country are reporting big first time claims and that will continue for the foreseeable future given that many businesses have shut down or are seeing little activity. Claims could rise further as the virus concerns hit employers' bottom line.

Coronavirus update: Here in the U.S., there are 9,474 cases, a spike of near 40% overnight virus that includes 218 new cases with 155 total deaths. There are 227,086 cases of the virus reported worldwide, 9,285 deaths while 85,961 having recovered from the virus. Italy continues to be on total lock down. Current risk assessment from the CDC: 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.


Wednesday - March 18  

Market Wrap - Extreme volatility continued today across all asset classes here in the U.S. with the Dow closing below 20K at 19,898. Yields rose, Mortgage Bonds fell as investors didn't discriminate as to what to unload. The 10-yr yield rose to 1.19%, below the session high of 1.26%. This pattern will continue until we see some type of containment or a slowdown of new virus cases. If you have an opportunity to lock a client here, you should do so. Volatility is incredibly high and at the moment, it doesn't appear we are going to revisit the rates seen last Monday. As we look for a bottom in the selloff - hopefully prices hold near current levels and above the 200-day MA. In Treasuries, we are watching 1.35% as upside resistance should the yield continue to climb.

Late Morning Review - The Commerce Department reports that construction of new homes edged lower in February from January due in part to a big decline in multi-family dwellings. Housing Starts fell 1.5% to an annual rate of 1,599,000, down 1.5% from January while starts surged 39% year over year. Single-family starts rose 6.7% monthly and were up 35% year over year. Multi-family dwelling fell by 17% month over month. Building Permits, a sign of future construction, fell 5.5% to an annual rate of 1,464,000.

Mortgage rates surged in the latest week but still remain just above all-time lows, reports the Mortgage Bankers Association. The 30-year fixed-rate mortgage rose to 3.74% from 3.47% for the week ending March 13, 2020. The Refinance Index fell 10% while the Purchase Index fell 1%. "The ongoing situation around the coronavirus led to further stress in the financial markets late last week, with unprecedented volatility and widening spreads. This drove mortgage rates back up to their highest levels since mid-February and led to a 10 percent decrease in refinance applications.

Tuesday - March 17  

Market Wrap - The mortgage bond market surged higher this morning on the heels of New York Fed buying but once it ended, prices fell off a cliff which prompted our alert to lock. Treasury securities crashed as investors shifted to riskier assets such as stocks. The major U.S. indexes jumped after President Trump promised to "go big" with stimulus on coronavirus aid. The Dow gained 1,048 points as extreme volatility continues. The yield on the 10-yr Note spiked to 1.07%. Oil prices continue to tank after Saudi Arabia vowed to boost exports to record highs - WTI oil ended at $26.84/barrel, -$1.86. Economic data is limited to Housing Starts/Building Permits tomorrow but will take a backseat to the coronavirus, the Fed and expectations for the economic outlook.

Late Morning Review - Home builder confidence remained strong in March though the index dipped from February. The NAHB Housing Marker Index fell two points to 72. Any number over 50 indicates that more builders view conditions as good than poor. Looking ahead six months, sales expectations fell modestly. “Builder confidence remains solid, although sales expectations for the next six months dropped four points on economic uncertainty stemming from the coronavirus,” said NAHB Chairman Dean Mon, a home builder and developer from Shrewsbury, N.J. “Interest rates remain low, and a lack of inventory creates market opportunities for single-family builders.”

Consumer spending dipped in February as fears of the coronavirus set in late in the month. Retail Sales fell by 0.5% after the 0.6% gain in January and was the largest decline in a year. The March numbers will more accurately reflect if the consumer shutdown but there was a run on grocery stores as Americans hoarded essentials to run their households. There will be hits to those businesses such as bars, restaurants, conferences and sporting events.

Coronavirus update: Here in the U.S., there are 4,744 cases of the virus that includes 81 new cases with 93 total deaths. There are 187,787 cases of the virus reported worldwide, 7,478 deaths while 80,848 having recovered from the virus. Italy continues to be on total lock down. Current risk assessment from the CDC: 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.

Monday - March 16  

Market Wrap - Big Fed moves were unable to soothe the extreme coronavirus fears today as the Dow saw its largest daily point loss in its history plunging nearly 3,000 points on fears of further slowing economic growth. Investors rushed into the safe-haven of the bond markets as the 10-yr yield fell to .75% from Friday's close of .96% though above its session low of .63%. Mortgage Bonds closed with strong gains though below the session highs. Look for more of the same volatility as the week progresses. A fallout from the virus came from today's weak and negative reading Empire Manufacturing Index for March, the worst number since 2009. Retail Sales and the NAHB Housing Market Index will be released tomorrow but will take a backseat to the coronavirus headlines and economic fallout.

Late morning Review - In an emergency move, the Fed cut the benchmark Fed Funds Rate by a full point to zero last night. They also embarked on a new QE program, committing a massive $700B buying program of Treasuries ($500B) and Mortgage-Backed Securities ($200B) saying, "Global financial conditions have been significantly affected" (by the coronavirus). Stocks are reacting very negatively and essentially pricing in a recessions due to the coronavirus economic impact. Oil prices continue to plunge on demand fears and oversupply - WTI oil at $29.23/barrel, -$2.51.

From last night's Fed statement: "The coronavirus outbreak has harmed communities and disrupted economic activity in many countries, including the United States. Global financial conditions have also been significantly affected. Available economic data show that the U.S. economy came into this challenging period on a strong footing."In addition, "The Federal Reserve is prepared to use its full range of tools to support the flow of credit to households and businesses and thereby promote its maximum employment and price stability goals." Last night's announcement will replace this week's Fed meeting on Tuesday and Wednesday.

Mon, Mar 16 8:16 AM
Mortgage Bond prices soar at the open, Treasury prices surge as investors rush to the safe haven of the bond markets during extreme uncertainty. 10-yr yield .77% from Friday's close of .95% though up from this morning's low of .63%. Stay tuned.

Friday March 13


Next week - The coronavirus fears will continue to impact the U.S. financial markets and its uncertain economic impact will continue to cast a cloud for some time. Extreme volatility in the markets will also remain until we can see some containment of the virus or some certainty.

The Federal Reserve cut rates last week in an emergency meeting and then injected further liquidity into the financial system on Thursday. That came ahead of this week's two-day Fed meeting that kicks off on Tuesday and ends Wednesday with the Monetary Policy Statement being released at 2:00 p.m. ET. We are expecting at least a 75-basis point cut to the short-term Fed Funds Rate and it could even be steeper than that... possibly a 100-basis point cut.

Another enormous potential market mover is what the Fed says in the monetary statement on Wednesday, such as additional measures to try and stimulate the economy.

The economic calendar is packed with key reports this week, but all data will take a backseat to the Fed and the headlines surrounding the coronavirus.

Week in Review - This past week was a head-scratcher as home loan ticked up slightly week over week despite the 10-year Note yield hitting a historic low of 0.31% and Stocks enduring heavy losses. Typically, when Stocks drop, so do rates -- especially after historic Stock losses like those this past week.

So, what happened?

Home loan rates are determined on the pricing of mortgage backed securities. Due to all of the recent refinance activity as a result of the low rates, the Bond market was flooded with an enormous supply of Mortgage Bonds.

When additional supply comes into any market, prices can move lower, and that is what we saw last Monday as mortgage backed securities touched a six-year price high and started to reverse lower.

Once Mortgage Bonds started to drop in price, thereby increasing rates, something very interesting happened. The sell-off in Mortgage Bonds really gained steam causing a further bump up in rates.

Why did mortgage backed securities drop so fast?

Mortgage backed securities carry prepayment or refinance risk, which limits how fast rates drop when they are dropping. The opposite is also true. This means when rates start to rise, the prepayment or refinance risk goes away causing a sharp move lower in prices and higher in rate.

Bottom line: home loan rates remain within a whisker of the best levels seen earlier in the week. And there is an old saying, "the cure for higher rates, is higher rates," meaning at some point as prices drop and interest rates tick up, investors will buy Mortgage Bonds and stabilize interest rates.

If you or someone you know has questions about home loans, give me a call. I'd be happy to help.





Tuesday - March 10  

Credit availability modestly declined in February as both conforming and jumbo segments of the market saw a decline. The MBA reports that its Mortgage Credit Availability Index (MCAI) fell 0.3% to 181.3 last month. A decline in the MCAI indicates that lending standards are tightening, while increases in the index are indicative of loosening credit. The MCAI is calculated using several factors related to borrower eligibility (credit score, loan type, loan-to-value ratio, etc.).

Housing sentiment remained elevated in February despite a slight dip from January. Fannie Mae reports that its Home Purchase Sentiment Index (HPSI) declined 0.5% to 92.5 but remained near its survey high of 93.8. The percentage of Americans who say it is a good time to buy remained the same this month at 59%, while the percentage of Americans who say it is a good time to sell increased from 66% to 67%. Fannie Mae said the markets have not yet seen the fallout from the coronavirus as volatility may be seen in the months ahead as the virus plays out.

Coronavirus update: More than 114,000 cases of the virus have been reported worldwide with more than half of those infected already recovered, reports Johns Hopkins. Four thousand people around the globe have died from the infliction. Italy is now on total lockdown. Current risk assessment from the CDC: For the majority of people, the immediate risk of being exposed to the virus that causes COVID-19 is thought to be low. There is not widespread circulation in most communities in the United States.


Monday - March 9  

Oil prices plunged on Monday due to the failure of Russia and Saudi Arabia to cut production. West Texas Intermediate oil fell $7 to $34/barrel as the coronavirus fears have also impacted prices due to demand fears. The average national price for a gallon of regular gasoline has fallen to $2.38 and prices will fall further this week. This decline in gas prices will provide purchasing power to the consumer as it essentially serves as a tax cut.

U.S. stocks are plunging once again today as the oil markets melt down and as the coronavirus fears weigh on economic growth. The Dow Jones Industrial Average has lost nearly 20% from the all-time high of 29,568 hit on February 12 to the low seen this morning of 23,818.

Coronavirus update: About 564 people in the U.S. have been confirmed to have the virus. Of those, 22 people have died, with deaths in Washington (18), California (1) and Florida (2). (Globally, more than 111,000 cases have been confirmed, with 3,892 deaths.) John's Hopkins Center says that 62,000 people worldwide have recovered from the virus. Current risk assessment from the CDC: For most people (in the U.S.), the immediate risk of being exposed to the virus that causes COVID-19 is thought to be low. This virus is not currently widespread in the United States.

Friday March 6

The extreme volatility in the U.S. financial markets is likely to continue in the days ahead as the coronavirus headlines impact investor sentiment.

Economic reports are light, but we will see a key inflation report from the Consumer Price Index. Inflation has been subdued and will continue for the foreseeable future.

In this climate of uncertainty surrounding the spread of the coronavirus, mortgage rates are at historic lows and will likely remain low throughout 2020.

Weekly Initial Jobless Claims will garner some attention to gauge whether or not the job market is seeing any fallout from the coronavirus. It has not shown up yet. And last week, planned job cuts by U.S.-based employers declined in February from January, reports outplacement firm Challenger Gray & Christmas.

Reports to watch:

Inflation data will be seen from Wednesday's Consumer Price Index and Thursday's Producer Price Index.

  • Weekly Initial Jobless Claims will be released on Thursday with Consumer Sentiment being delivered on Friday.

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Week in Review - Home loan rates touched all-time lows this past week, fueling refinance activity and creating a sense of urgency for homebuyers to lock in purchase loans.

The question many people are asking is, "how low can rates go?"

The short answer -- no one knows. A lot will be determined by the economic impact of the coronavirus and that is impossible to handicap at the moment.

What we do know:

  • The coronavirus outbreak is improving in China and the outbreak numbers here in the U.S. have not exploded, as of yet. This is good news, and should it continue, it is unlikely we will see much lower home loan rates in the near future.
  • Home loan rates have not improved in lockstep with the 10-year Note yield, which has also declined, though much more sharply, to a historic low of .66%. The reason -- mortgage backed securities (MBS), where home loans are priced, carry a different risk profile than that of Treasuries. Investors in MBS are subject to refinance risk when rates go lower. To offset that risk, investors demand a premium within MBS which creates a higher price to both the lender and ultimately the homeowner.
  • Mortgage lenders are so busy they can hardly keep up with the business. What is one thing you don't do when business is so busy? Lower price.

Bottom line: today represents a golden opportunity to lock on the best rates in the history of the U.S. and should be taken by those who can benefit.

If you or someone you know has questions about home loans, give me a call. I'd be happy to help.




After last week's packed economic calendar, this week will continue to provide key reports which include the most important economic reading to follow -- the Jobs Report.

The markets will be glued to the headlines around the coronavirus to find out if it even impacted the labor market in February.

In addition to the labor market news, data will come from both the manufacturing and service sectors.

We may also hear from the Fed, who might hint at a rate cut as early as March to help combat the negative economic effects of the coronavirus. Remember, long-term Bonds don't necessarily like rate cuts, and they showed as much last year as mortgage rates actually ticked up after three Fed rate cuts.

Reports to watch:

  • Manufacturing data will come from Tuesday's national ISM Manufacturing Index.
  • Labor market data will be delivered on Wednesday with ADP Private Payrolls, Thursday's Weekly Initial Jobless Claims, and Friday's government Jobs Report, which includes Non-Farm Payrolls, the Unemployment Rate, and Hourly Earnings.
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