CHM Blog

Realtor Market Insider May 18, 2020

May 18th, 2020 1:28 PM by Richard Sardella MLO.100007700/NMLS 233568

Rates At a Glance
Mortgage Rates
Currently Trending
7 Day Mortgage
Rate Forecast
This Week's
Potential Volatility

Higher

Higher

Average
(by Sigma Research)
RE Report

Homebuyers and sellers showing resilience

When industries begin speaking of a "new normal," it can be difficult to discern how many of its old practices are on track to permanently change and which ones are merely expedient, addressing the current pandemic needs. Whichever the case, few industries will look exactly the same as they used to, including real estate.

RealtyBizNews reports that the U.S. government has declared the residential real estate sector an essential public service amid social distancing, but it asks how current buyer and seller sentiments compare to pre-pandemic aspirations, citing a homes.com survey of 1,000 people from across the country. It reveals that even with the economic uncertainty surrounding the pandemic, more than 48% of those who planned to before the pandemic still want to move forward with their plans. "While shelter-in-place orders across the country hinder events like open houses and home tours, most of the real estate industry has pivoted into operating predominantly online to help support these consumers," says the report.

Of those surveyed nearly three-quarters of the respondents said they're continuing to search for homes online, compared to under 24% who said they're putting the search on hold until things are back to normal. On the flip side, only about 34% are willing to tour homes during this time, with the majority saying they will wait out the pandemic. Of course, many consumers are unfamiliar with how virtual tours work, since this is a fairly new phenomenon. The report indicates that nearly 29% don't know what their current options are to navigate the purchase process, with a similar number expressing they have several homes in mind but hesitate because they are currently unable to tour them.

Sellers, however, are not as hesitant. According to the survey, "Despite concerns over market instability and how long the pandemic will last, 45% of those who planned to sell their home during this time are still moving forward as planned, either adjusting as necessary or exploring what other options they have." This is despite sellers feeling burdened with adjusting to the COVID-19 pandemic. Nearly a third of them are unsure of how to move forward, and the lack of buyer traffic does not help.

Consumers ready to buy or sell need not put their plans on hold, but would benefit by contacting their Realtor to see how they can access virtual tours and open houses. With many states now offering online closings and loosening restrictions on home inspection requirements, you have more options than ever to jump back into the market.

Source: Homes.com | Realty Biz | TBWS

This Week's Mortgage Rate Summary

How Rates Move:

Conventional and Government (FHA and VA) lenders set their rates based on the pricing of Mortgage Backed Securities (MBS) which are traded in real time, all day in the bond market.  This means rates or loan fees (mortgage pricing) moves throughout the day, being affected by a variety of economic or political events.  When MBS pricing goes up, mortgage rates or pricing generally goes down.  When they fall, mortgage pricing goes up.  Tracking these securities real-time is critical.  For more information about the rate market, contact me directly.  I’m among few mortgage professionals who have access to live trading screens during market hours.

Rates Currently Trending: Higher

Mortgage rates are trending slightly higher so far today.  Last week the MBS market worsened by -36bps.  This was enough to move rates or fees higher last week. We saw moderate rate volatility through the week.

This Week's Rate Forecast: Higher

Three Things: These are the three areas that have the greatest ability to move rates this week. 1) Coronavirus, 2) The Fed and 3) Treasury Dump

1) Coronavirus: The stock market(s) and media outlets are going wild over a COVID 19 vaccine based on news that a trial of 8 people went well. If all three phases go well, the vaccine won't likely be ready until 2021. But the bond market is once again focused on the real stories that impact the global macroeconomy. Primarily, we are watching the world for areas that were hit by the pandemic earlier than the US and appear to be tailing off in terms of new cases/deaths.

2) The Fed: The Federal Reserve Bank of NY will continue its "taper" of MBS and purchase even less this week. They are dropping their Uniform MBS purchases down from last week's $3.25B each day down to $2.97B of daily purchases this week. Keep in mind that the $2.97B will be evenly split among 2.5, 3.0, and 3.5 coupons, which means only approximately $990M will be used to purchase the rate-setting 2.50 coupon. We will hear from Fed Chair Powell again (3rd time in 7 days), and get the Minutes from the last FOMC meeting.

3) Treasury Dump: The US Treasury will issue a new animal that will compete for the same food source as our MBS and is in direct competition as they revive the 20 year Treasury Bond on Wednesday.

Honorable Mention: Nearly 4 million homeowners are in some type of mortgage forbearance plan - representing 7.54% of all mortgages, delinquencies are set to eclipse the great recession, which peaked at 10%.

This Week's Potential Volatility: Average

Rates continue to trade in a very tight range with a slight bias toward higher rates. With the reduction of the Treasury purchases, the likelihood is that rates will trail higher. However, rates have remained in a very tight channel for six weeks, and we don't see anything that will likely push them dramatically out of the current range.

Bottom Line:

If you are looking for the risks and benefits of locking your interest rate in today or floating your loan rate, contact your mortgage professional to discuss it with them.

About Richard Sardella

Richard Sardella has been actively managing and providing services in the mortgage industry for over 27 years. Richard serves on the board of directors as President of Colorado Home Mortgages Inc.

About This Report And Disclosure Information

All information furnished has been forwarded to you and is provided by thetbwsgroup only for informational purposes. Forecasting shall be considered as events which may be expected but not guaranteed. Neither the forwarding party and/or company nor thetbwsgroup assume any responsibility to any person who relies on information or forecasting contained in this report and disclaims all liability in respect to decisions or actions, or lack thereof based on any or all of the contents of this report.

MLO of record MLO.100007700 / NMLS#233568 / CHM NMLS#127716.

Posted in:General
Posted by Richard Sardella MLO.100007700/NMLS 233568 on May 18th, 2020 1:28 PM

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