CHM Blog

Daily Market Analysis

Stock indexes started slightly lower this morning, the 10 yr. note yield unchanged.

At 7:00 am ET, weekly MBA mortgage applications; the composite -0.6%, purchase apps +9.0%, refinance apps -5.0%.

At 8:15 am Et, Nov ADP private jobs were expected +420K, as released 307K, October jobs initially reported at 365K were revised to 404K. Take this month, and the revision to October, and the ADP jobs reports 74K less than estimates. ADP's jobs vary substantially from the BLS data report on Friday. The present estimate for BLS private job growth +486K from October's 638K jobs. The BLS data on Friday is likely to be quite different than current estimates; it is challenging to count jobs in this situation with the virus counting unreliable. Whatever the BLS data shows, with the vaccine on the way, markets will focus on the implications of its impact on jobs. Some still believe that unemployment will return to the 3.0% level before the pandemic, which in our view, is not likely. Unemployment will not experience those low levels any time soon as businesses learn that the digital world has changed the need for many jobs, and small businesses won't quickly add many jobs after being devastated for months.

According to ADP, service-provider employment increased 276,000 in November, reflecting gains in leisure and hospitality, health care, and business services. Payrolls at goods producers rose 31,000 last month, including a 22,000 gain at construction firms. Payrolls at small, medium, and large businesses all increased, with the biggest advance occurring at medium-size firms. Hiring rose 139,000 at those companies with 50 to 499 employees. Large businesses added 58,000 to payrolls, and small companies took on 110,000 workers.

The Pfizer vaccine has been approved by the UK, not yet in the US and the European Union. The shot will be available in Britain next week. "This is going to be one of the biggest civilian projects in history," Health Secretary Matt Hancock said in a radio interview, with 50 hospitals preparing to administer the vaccine and 800,000 doses ready. Doctors across the country were put on standby for a possible rollout. "We can see the way out, and we can see that by the spring we are going to be through this," Hancock said on Sky News. Good news, but supply is still a key issue. The UK has ordered 350 mil doses that are not yet available. The US is awaiting a decision from the US Food and Drug Administration in the middle of December, the same time horizon in which it expects a ruling from European Union regulators. The initial use will be for front health workers and those older in extended care facilities based on the current thinking; we normal folks won't be in line for a few months, maybe by March?

A new stimulus package is very much needed now, but there's still no deal, and Congress is about to fold tents until next year. A bipartisan group of senators has proposed a $908B coronavirus relief package, which includes a $180B boost for unemployment benefits and about $240B for state and local governments. Neither party's leaders have agreed to the proposal yet. Pelosi and Senate Majority Leader Mitch McConnell each took a shot at it, but no one is budging. Pelosi and Chuck Schumer presented a proposal to McConnell and Treasury Sec. Mnuchin wouldn't say what it is, calling it "a private proposal to help move the ball forward." Republican's plan, according to what we hear, is the same as before. The issue has always been money for states and cities that Dems want, while Republicans tilt to funding more unemployment assistance for those suffering. Yesterday Jerome Powell reiterated to lawmakers at a hearing that "the risk of overdoing it is less than the risk of underdoing it" on fiscal stimulus. He pointed out that the pace of improvement in the economy has weakened in recent months.

At 9:30 am ET, the DJIA opened -180, NASDAQ -75, S&P -13. 10 yr. unchanged at 0.94%. FNMA 2.0 30 yr. coupon at 9:30 +3 bps from yesterday's close and -13 bps from 9:30 yesterday.

After the volatile day in the rate markets yesterday, pushing the 10 yr. up10 bps and MBS prices down 35 bps, today ahead of Friday's employment data, it looks like it will be quiet. Investors and money managers are distilling the movements yesterday.

PRICES @ 10:00 AM ET

10 yr. note: 0.95% +2 bp

5 yr. note: 0.43% +1 bp

2 Yr. note: 0.17% unch

30 yr. bond: 1.70% +3 bp

Libor Rates: 1 mo. 0.147%; 3 mo. 0.232%; 6 mo. 0.258%; 1 yr. 0.333% (12/01/20)

30 yr. FNMA 2.0: @9:30 103.64 +3 bp (-14 bp from 9:30 yesterday)

30 yr. FNMA 2.5: @9:30 104.77 +2 bp (+5 bp from 9:30 yesterday)

30 yr. GNMA 2.5: @9:30 104.91 -14 p (-3 p from 9:30 yesterday)

Dollar/Yuan: $6.5658 -$0.0065

Dollar/Yen: 104.52 +0.19 yen

Dollar/Euro: $1.2082 +$0.0010

Dollar Index: 91.26 -0.05

Gold: $1819.50 +$0.80

Crude Oil: $44.85 +$0.30

DJIA: 29,7546 -77

NASDAQ: 12,270 -85

S&P 500: 3655 -7

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 December 2nd, 2020 10:56 AM
Daily Market Analysis

The 10 yr. started 0.86% +2 bps this morning, but it didn't hold. The stock indexes are rallying after selling yesterday. MBS prices slightly lower at 8:30 am ET after strong price gains yesterday and last Friday (+47 bps), but fell rapidly after that (-17 bps at 9:00 am). MBSs are seeing a lot more buying now than the safer but lower rate 10 yr. note. The Fed is buying MBSs, higher interest rates, and not much concern about duration normally plaguing mortgages when interest rates fall. It is not likely that interest rates will decline as long as the economic outlook in the US and globally are perceived to be improving. With vaccines on the way, the Fed's support by purchasing treasuries, MBSs, corporate bonds… and the Democrats are expected to unleash enormous spending; the equity market outlook is very optimistic among investors. Although the Fed will keep the Federal Funds rate low, the path for long-dated treasuries is up... eventually; but presently, no movement on the 10 yr. note. A bullish economic outlook that currently exists will lead to increased inflation and higher interest rates, although rates will still be characterized as being low.

Biden will formally introduce his top economic policy advisers today. Neeta Tandem, to serve as his White House budget chief, will face difficulty being confirmed. Her selection yesterday to lead the Office of Management and Budget drew swift objections from GOP senators who could block her confirmation, with Senator John Corny of Texas calling her selection "radioactive."…. "Most Republicans are open to any reasonable nominee by the incoming administration," he told reporters on Capitol Hill. "We're prepared to try to work with the vice president once the vote's certified, but she certainly strikes me as his worst nominee so far."

At 9:30 am ET, the DJIA opened +310, NASDAQ +96, S&P +36. 10 yr. 0.89% +4.5 bps. FNMA 2.0 30 yr. coupon -19 bps from yesterday's 22 bp gain and unchanged for 9:30 am yesterday.

At 10:00 am ET, Nov ISM manufacturing index expected at 57.7 from 59.3; as released 57.5, employment at 48.4, very weak and disappointing although no reaction to it as rates and prices are getting hit this morning. October construction expected +0.8% increased 1.3%, yr./yr. +3.7%.

Jerome Powell testifies this morning on the Coronavirus Aid, Relief, and Economic Security Act before the Committee on Banking, Housing, and Urban Affairs at US Senate. In prepared text released the day before today's testimony, Jerome Powell said the economic outlook remains "extraordinarily uncertain" and recovery will largely depend on the success of efforts to keep the pandemic in check. He repeated prior comments that the vaccine's progress is very positive for the "medium term", yet for now he said significant challenges remain, especially regarding its production and distribution: "It remains difficult to assess the timing and scope of the economic implications of these developments with any degree of confidence," he said. Powell repeated that economic activity has continued to recover though the pace of improvement has "moderated". Powell said household spending on goods, especially durables, has been "strong" and has moved above its pre-pandemic level; in contrast, spending on services remains "low" due to weakness in virus-exposed sectors, including travel and hospitality. The Fed chair noted that the overall rebound in household spending is due, in part, to federal stimulus payments and expanded unemployment benefits. He said more than half of the 22 million jobs that were lost in March and April had been regained, although here too, he said the pace of improvement has moderated. Joblessness has been especially severe for lower-wage workers in the services sector: "The economic dislocation has upended many lives and created great uncertainty about the future." Fed actions since April have helped to "unlock" almost $2 trillion of funding to support businesses large and small, nonprofits, and state and local governments.

Fundamentally the outlook for long-term interest rates will edge up; technically, all of our indicators we use are bearish and have been so two months even though the 10 yr. still stays within its tight range but with an obvious uptrend pattern.

PRICES @ 10:00 AM ET

10 yr. note: 0.91% +6 bp

5 yr. note: 0.41% +5 bp

2 Yr. note: 0.16% +2 bp

30 yr. bond: 1.65% +8 bp

Libor Rates: 1 mo. 0.153%; 3 mo. 0.227%; 6 mo. 0.255%; 1 yr. 0.330% (11/30/20)

30 yr. FNMA 2.0: @9:30 103.77 -19 bp (unch from 9:30 yesterday) (at 10:00 -30 bps)

30 yr. FNMA 2.5: @9:30 104.72 -12 bp -3 bp from 9:30 yesterday) (at 10:00 -20)

30 yr. GNMA 2.5: @9:30 104.94 -27 bp (-1 bp from 9:30 yesterday) (at 10:00 -36 bp)

Dollar/Yuan: $6.5730 -$0.0059

Dollar/Yen: 104.55 +0.23 yen

Dollar/Euro: $1.1995 +$0.0070

Dollar Index: 91.66 -0.21

Gold: $1812.50 +$31.60

Crude Oil: $44.96 -$ 0.38

DJIA: 30,007 +369

NASDAQ: 12,338 +140

S&P 500: 3669 +48

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 December 1st, 2020 9:15 AM
Rates At a Glance
Mortgage Rates
Currently Trending
7 Day Mortgage
Rate Forecast
This Week's
Potential Volatility

Neutral

Neutral

High
(by Sigma Research)
RE Report

Homebuying this winter is going to very different

In a normal year, this is the time when home sales dip. In a normal year, this is when you can negotiate on getting the price a tad lower, and homes sit on the market longer because of the holidays. In a normal year, winter is typically a time when buyers have the advantage.

This is the winter, however, when all that flies out the window, according to Danielle Hale, Realtor's chief economist. "Normally winter is a good time for buyers," she says, but qualifies it by adding that because the coronavirus pandemic upended normal real estate patterns by keeping buyers at home last spring, it has created a pent-up demand for homes that are only now being felt and felt hard.

"It's unusual times," agrees Lawrence Yun, chief economist at the National Association of Realtors. "Normally buyers have a slight edge as homes sit on the market for a longer period. It's likely to be different this year."

What to expect? For one, fewer homes to choose from than usual. Realtor.com's Monthly Housing Market Trends Report reports that with more buyers than sellers in the market, homes aren't lingering on the market for long. In September, homes nationwide spent 12 fewer days on the market than last year, so if you are a buyer, you'll need to be prepared. That means getting your mortgage pre-approval paperwork in place so you can make an offer fast.

A low inventory market may cause another kind of shift, however. "For one, if coronavirus rates remain low in a community, sellers who've been leery about inviting buyers into their home might decide it's safe enough to give it a try," says Realtor's Erica Sweeney. She cites Hale, who says, "Even though inventory will remain low, we could see a slight improvement as sellers gain more confidence in the housing market," Hale says.

If unemployment rises, more people may be forced to sell their homes. According to the Mortgage Bankers Association, more than 3 million homeowners missed their mortgage payment in September. This means distressed properties may be hitting the market. Add low interest rates to the equation, and you might either reap the rewards in lower house payments or the ability to buy a larger home.

Rare are the times when it could be cheaper—or about the same in the long run — to buy a home rather than pay rent. According to a realtor.com report, in the first quarter of 2020, the median monthly cost to purchase a home was $1,584, compared with $1,391 to rent. That said, prices for renting or buying vary by area, so it's smart to compare those costs by checking a "rent vs. buy" calculator for your neighborhood and take into account how long you plan to stay put.

Source: Realtor, 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: Neutral

Mortgage rates are trending sideways this morning.  Last week the MBS market improved by +2bps.  This was not enough to move rates lower last week. We saw low rate volatility through the week.

This Week's Rate Forecast: Neutral

Three Things: These are the three areas that have the greatest ability to move rates this week. 1) Central Bank, 2) Jobs, and 3) Coronavirus.

1) Central Bank: We will get the latest interest rate decision and policy statement from the Reserve Bank of Australia, but the market focus will be on speeches by the ECB President Christina Lagarde and our Fed Chair Powell, who will testify before the Senate and House on Tuesday and Wednesday. We will also get the Fed's Beige Book on Wednesday.

2) Jobs: We have a ton of jobs/wage-related data this week culminating with Big Jobs Friday, where we will get the Unemployment Rate, Non-Farm Payrolls, and most importantly, Average Hourly Earnings. We will get ADP Private Payrolls, Challenger Job Cuts, Initial Weekly Jobless Claims, and internal employment readings within the ISM releases throughout the week.

3) Coronavirus: It's yet another "Medical Monday" (used be called "Merger Monday" in another day and time) where Moderna has joined the list of a vaccine that is over 94% effective and is filing for emergency use approval with the FDA today. The key to this week is that the Senate is back in session after their holiday-recess, and markets will be very reactive to any movement in talks on a stimulus package that may - or may not- be practical before January 20th. We also have a debt ceiling and looming government shut down right around the corner.

This Week's Potential Volatility: High

The rate markets will pay very close attention to the jobs numbers throughout the week. Depending on how close the actual numbers are to the predictions, the jobs numbers could spike volatility. Once again this week, rate markets will pay close attention to coronavirus developments.

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 November 30th, 2020 12:39 PM
Daily Market Analysis

Last Friday the 10 yr. dropped 4 bps, and MBS prices increased 25 bps. This morning the 10 yr. started at 0.85% +1 bps, and MBS prices are down 6 bps.

This is employment week, and Jerome Powell will testify on the Coronavirus Aid, Relief, and Economic Security Act before the Committee on Banking, Housing, and Urban Affairs at U.S. Senate on Tuesday; and on Wednesday at the Committee on Financial Services, U.S. House of Representatives. His testimony is very critical to markets, divide between Treasury and the Fed over relief spending and what he has to add or suggest.

Congress has a plate full before it closes for the holidays; on Dec 11th the temporary funding to keep the government open will expire, always a lot of talk about the continuing debt issues, but at the end of the day, the political parties will continue to kick the can forward. Last week, lawmakers agreed on overall spending levels, which should clear the way for multiple subcommittees to hash out details and avoid the risk of a partial government shutdown. A possible, but unlikely, another stimulus package that isn't close to an agreement; and the annual defense authorization. Also, there is a $2B border wall funding that will be argued; even if it were to pass, the Biden administration wouldn't use it to add to the Wall.

Biden is expected to unveil his picks for several top economic positions as early as today; he will also finally receive his first classified intelligence briefing, an essential step towards taking control of national security. He will announce Janet Yellen, the first woman to chair the Federal Reserve, as his Treasury secretary, and Adewale Adeyemo, the first Black deputy Treasury secretary.

At 9:30 am ET, the DJIA opened -167, NASDAQ +34, S&P -7 bps. 10 yr. 0.85% unchanged. FNMA 2.0 30 yr. coupon at 9:30 am +3 bps from Friday's close, and +21 bps from 9:30 am Friday morning.

At 9:45 am ET Nov Chicago PMI index expected at 59.2 from 61.1; as released, it weakened to 58.2.

At 10:00 am ET October pending home sales from NAR: expected +2.0% from -2.2% in Sept.; sales were down 1.1%; annually +20.2%.

Financial markets following every burp about the political climate but with little direct interest in the continual differences and constant comments. The markets are always a step ahead, focusing on the huge differences between the Trump presidency and what the Biden administration may do. The equity markets are setting new all-time highs. The interest rate markets essentially unchanged, keeping within the narrow ranges. According to Jerome Powell and other Fed officials, low rates are here to stay until at least 2023. Defining low-interest rates is where the uncertainty lies. The trend of the 10 yr. note is up. It has been increasing slowly since mid-August; it has not traded below its 40-day average since early August, and there is a key uptrend line that we deem very important; today 0.80%. The 2.0 FNMA 30 yr. coupon has heavy resistance at where it is trading this morning (103.79), it has tested that price four times since August.

PRICES @ 10:00 AM ET

10 yr. note: 0.85% unch

5 yr. note: 0.37% unch

2 Yr. note: 0.15% unch

30 yr. bond: 1.58% +1 bp

Libor Rates: 1 mo. 0.154%; 3 mo. 0225%; 6 mo. 0.257%; 1 yr. 0.330% (11/27/20)

30 yr. FNMA 2.0: @9:30 103.77 +3 bp (+21 bp from 9:30 Friday)

30 yr. FNMA 2.5: @9:30 104.75 +3 bp (+12 bp from 9:30 Friday)

30 yr. GNMA 2.5: @9:30 104.95 -5 bp (+15 bp from 9:30 Friday)

Dollar/Yuan: $6.5804 +$0.0034

Dollar/Yen: 104.26 +0.17 yen

Dollar/Euro: $1.1988 +$0035

Dollar Index: 91.61 -0.18

Gold: $1772.80 -$15.30 (bit coin is the current trend)

Crude Oil: $45.27 -$0.26

DJIA: 29,655 -275

NASDAQ: 12,197 -9

S&P 500: 3623 -15

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 November 30th, 2020 10:41 AM
Daily Market Analysis

This morning, several economic reports began with weekly MBA mortgage applications; apps were strong, up 5.0% for the composite, +4.0% for purchases, and +3.9% for refinances.

At 8:30 am ET, weekly unemployment claims were higher than 730K at 778K +30K from the prior week. Continuing claims increased from 743.5 to 748.5K. The increase in claims, the first back to back increase.

October durable goods orders expected +0.9% increased 1.3%, ex transportation orders were strong, forecasts were +0.3% as released +1.3%. Core capital goods orders were thought to be +0.6% increased by 0.7%.

G3 preliminary GDP was unchanged from the advance release last month at +33.1%—the PCE annual rate of 40.6% was in line with estimates.

All that data at 8:30 am ET didn't generate any reaction in the stock and bond markets. Markets are focused on the transition from Trump to Biden. The WSJ is reporting this morning that within the Trump inner circle, he is increasingly coming to accept that Biden did win. President Trump is also saying he will continue to investigate election improprieties. On Monday, the Trump administration opened the transition efforts with the GSA now sharing all info to the Biden team and including them in daily national security updates.

Markets being buoyed by the reality that vaccines will be available with two to three weeks for very selected personal, but still questions about when they will be available to the public. How long it takes to manufacture and distribute in the planning stages.

At 9:30 am ET, the DJIA opened -85, NASDAQ +14, S&P -5. 10 yr. a 9:30 am unchanged at 0.88%. FNMA 2.0 30 yr. coupon at 9:30 am +6 bps from yesterday, and +6 bps from 9:30 am yesterday.

More data at 10:00 am ET; October new home sales expected at 975K from 959K in Sept; sales exploded to 999K. and Sept revised to 1.002 mil. The U. of Michigan consumer sentiment index expected at 77.2 was 76.9. October personal income expected +0.1% declined 0.7%, personal consumption expenditures expected +0.4% was +0.5%. PCE price index 0.0%, yr./yr. +1.2%. Core PCE 0.0%, yr./yr. +1.4%.

Of all of the appointments to Biden's cabinet, the most important is Janet Yellen to head Treasury, markets still cheering over the announcement. Yellen is almost certain to pursue tighter coordination with the US Federal Reserve next year -- repairing recent frictions -- though observers say she will be careful to avoid any specific move that could trigger a wave of Republican protests. The first step, of course, is to be confirmed. There's little doubt that Congress will confirm her. Closing the gap between the Fed and Treasury will be Yellen's first task; that recently has ebbed. The Fed wants more fiscal stimulus, current Sec. Mnuchin ended Treasury's money authorized by Congress through the Cares Act, upsetting the Fed. Does she have the legal authority to resurrect the funds? Mnuchin's latest plan to put unused Cares Act money into the department's general account, over which Congress has authority, clouds whether the unused funds can be pried out of Congress. Mnuchin last week said five Fed facilities must sunset at the end of next month, and asked for the central bank to return unused funding.

While all markets will trade regular hours today, trade volume will be thin as many are heading home at about noon, and many money managers, investors, and traders won't be back until next Monday. On Friday, stocks will trade normal hours, and the bond and mortgage markets will close early at 2:00 pm ET. Friday's trade will be flat and for day traders quiet boring.

Last night at 9:00 am ET, the 10 yr. note yield increased to 0.89%, once again testing its support at 0.90%, since last night some improvement, at 10:00 am 0.87% -1 bp. No change in our technical view; the interest rate market still slightly negative in our work. It has been that way for two months, but there has been very little directional movement. The 2.0 30 yr. FNMA coupon has a rock-solid resistance at 103.79 (this morning 103.61).

PRICES @ 10:05 AM ET

10 yr. note: 0.867% -2 bp

5 yr. note: 0.38% -2 bp

2 Yr. note: 0.16% unch

30 yr. bond: 1.59% -2 bp

Libor Rates: 1 mo. 0.143%; 3 mo. 0.232%; 6 mo. 0.254%; 1 yr. 0.335% (11/24/20)

30 yr. FNMA 2.0: @9:30 103.59 +6 bp (+6 bp from 9:30 yesterday)

30 yr. FNMA 2.5: @9:30 104.63 +2 bp (-3 bp from 9:30 yesterday)

30 yr. GNMA 2.5: @9:30 104.81 -5 bp (+1 bp from 9:30 yesterday)

Dollar/Yuan: $6.5763 -$0.0156

Dollar/Yen: 104.34 -0.10 yen

Dollar/Euro: $1.1907 +$0.12

Dollar Index: 92.04 -0.19

Gold: $1813.90 +$8.70

Crude Oil: $45.34 +$0.43

DJIA: 29,859 -191

NASDAQ: 12,034 -3

S&P 500: 3618 -17

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 November 25th, 2020 8:57 AM

As reported by the Federal Housing Finance Agency:

FHFA Announces Conforming Loan Limits for 2021:                                                                    

Fannie Mae and Freddie Mac Baseline Limit Will Increase to $548,250

FOR IMMEDIATE RELEASE
11/24/2020

??Washington, D.C. – The Federal Housing Finance Agency (FHFA) today announced the maximum conforming loan limits for mortgages to be acquired by Fannie Mae and Freddie Mac in 2021.  In most of the U.S., the 2021 maximum conforming loan limit (CLL) for one-unit properties will be $548,250, an increase from $510,400 in 2020. 

Baseline limit

The Housing and Economic Recovery Act (HERA) requires that the baseline CLL be adjusted each year for Fannie Mae and Freddie Mac to reflect the change in the average U.S. home price.  Earlier today, FHFA published its third quarter 2020 FHFA House Price Index® (FHFA HPI®) report, which includes estimates for the increase in the average U.S. home value over the last four quarters.  According to the seasonally adjusted, expanded-data FHFA HPI, house prices increased 7.42 percent, on average, between the third quarters of 2019 and 2020.  Therefore, the baseline maximum CLL it in 2021 will increase by the same percentage. 

High-cost area limits

For areas in which 115 percent of the local median home value exceeds the baseline CLL, the maximum loan limit will be higher than the baseline loan limit.  HERA establishes the maximum loan limit in those areas as a multiple of the area median home value, while setting a “ceiling" on that limit of 150 percent of the baseline loan limit.  Median home values generally increased in high-cost areas in 2020, driving up the maximum loan limits in many areas.  The new ceiling loan limit for one-unit properties in most high-cost areas will be $822,375 — or 150 percent of $548,250. 

Special statutory provisions establish different loan limit calculations for Alaska, Hawaii, Guam, and the U.S. Virgin Islands.  In these areas, the baseline loan limit will be $822,375 for one-unit properties.

As a result of generally rising home values, the increase in the baseline loan limit, and the increase in the ceiling loan limit, the maximum CLL will be higher in 2021 in all but 18 counties or county equivalents in the U.S.   

Questions about the 2021 CLLs can be addressed to LoanLimitQuestions@fhfa.gov and more information is available at https://www.fhfa.gov/CLLs.

Other Resources

###

Posted in:General
Posted by Richard Sardella MLO.100007700/NMLS 233568 on November 24th, 2020 3:22 PM
Daily Market Analysis

Stock indexes continue to climb, recently fueled by another vaccine coming online. AstraZeneca announced its vaccine is coming, and it is easier to transport than Pfizer or Moderna, and it’s a one dose vaccine compared to two shot vaccines. AstraZeneca and Oxford are running trials of the vaccine in different parts of the world. They are currently only studying two full doses of the vaccine in their U.S. study, which is expected to enroll 30,000 volunteers. But the company is still recruiting participants and could add another arm to conduct further studies of the regimen using the half-dose. Very promising, but the company is still testing and looking into discrepancies between one and two doses.

Biden is quickly setting up his cabinet; Janet Yellen for Treasury is getting all of the attention. She is deep in experience working in government positions for years (Fed chief, Council of Economic Advisers just two). She should have little difficulty being confirmed by the Senate regardless of the outcome of the Senate races in Georgia that will determine which party has control. Speaking of the Georgia races, markets are buoyed by the potential of the Senate staying in the hands of Republicans that would slow or stop some of the more liberal policies that many on the extreme left in the Democratic party have espoused during the campaign. Looking over the rest of Biden’s selections, most are long-timers that have been with Obama and Biden for years, but that was expected and not unusual. What is shaking the tree a little, many of the campaign staff that worked for is election are not being considered for top jobs in the administration. “People are pissed,” said a Biden adviser. “I think I’m going to be taken care of but I have not been taken care of yet. I am really interested to find out how you even find out how you got a job in this White House.”

The transition to the Biden administration improved yesterday when GSA, after a green light from President Trump, opened up to providing necessary information that the new administration requires for a smooth transition. Trump, though, as you know, is still reluctant to admit he lost and concede, but his recent actions suggest he is close. Trump, in a post on Twitter, offered support for the move. The GSA announcement will allow the president-elect to access millions of dollars in funds and focus on putting together a leadership team. It also paves the way for Biden and Vice President-elect Kamala Harris to receive regular national security briefings that Trump also gets. Trump said on Twitter that his team would move “full speed ahead” with challenging “what will go down as the most corrupt election in American political history,” adding that he would “never concede.”

At 9:00 am ET, Sept Case/Shiller 20 city home price index was expected +0.5% increased to 1.3%, yr./yr. home prices increased 6.6% compared to August’s 5.4% yr./yr. The Sept FHFA home price index increased by 1.7%, better than 0.9% forecasts; yr./yr. home prices increased by 9.1%. Good news for the housing sector going forward. Interest rates will stay low, and the lack of inventory continues to point to increases in home prices. The housing market has been booming during the pandemic in the U.S., with cheaper borrowing costs and the desire for more space to spread out fueling a surge in purchases.

At 9:30 am ET, the DJIA opened +309, NASDAQ +60 S&P +28. 10 yr. at .87% +2 bps. FNMA 2.0 30 yr. coupon at 9:30 am -3 bps from yesterday and unchanged from 9:30 yesterday.

At 10:00 am ET, Nov consumer confidence index expected at 98.0 from 101.4 in October; as released, the index dropped to 96.1, the expectations also fell from 98.2 to 89.5.

This afternoon Treasury will auction $56B of 7 yr. notes; yesterday, the 2 and 5 yr. auctions were not aggressive in bidding.

No change in our technical analysis, still bearish but very little movement overall. In the last three days, the 10 yr. yield has increased from 0.82% to 0.87% this morning.

PRICES @ 10:10 AM ET

10 yr. note: 0.875% +2 bp

5 yr. note: 0.39% unch

2 Yr. note: 0.17% unch

30 yr. bond: 1.59% +4 bp

Libor Rates: 1 mo. 0.150%; 3 mo. 0.206%; 6 mo. 0.253%; 1 yr. 0.335% (11/23/20)

30 yr. FNMA 2.0: @9:30 103.53 -3 bp (unch from 9:30 yesterday)

30 yr. FNMA 2.5: @9:30 104.66 -3 bp (-4 bp from 9:30 yesterday)

30 yr. GNMA 2.5: @9:30 104.80 -11 bp (-3 bp from 9:30 yesterday)

Dollar/Yuan: $6.5918 +$0.0058

Dollar/Yen: 104.69 +0.14 yen

Dollar/Euro: $1.1852 +$0.0011

Dollar Index: 92.52 unch

Gold: $1798.80 -$39.00

Crude Oil: $44.32 +$1.26

DJIA: 29,967 +376

NASDAQ: 11.904 +24

S&P 500: 3609 +31

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 November 24th, 2020 12:48 PM
Rates At a Glance
Mortgage Rates
Currently Trending
7 Day Mortgage
Rate Forecast
This Week's
Potential Volatility

Neutral

Neutral

High
(by Sigma Research)
RE Report

Vacation homes increasingly in demand because of remote work trends

It's not something you'd expect during a pandemic and recession, but numbers don't lie. According to a PRNewswire report, sales of vacation homes are soaring. According to Redfin's report, October saw demand for second homes skyrocket 100% from a year earlier—the fourth triple-digit increase in the last five months. That outpaces the demand for primary homes.

Home sales are on the rise across the board due to record-low mortgage rates but also because of a wave of relocations during the pandemic. Demand for second homes rises to the top among more affluent Americans who work remotely, no longer need to send their kids to school in person, and are limited by travel restrictions, according to Redfin's lead economist Taylor Marr.

"With mortgage rates at all-time lows and offices shut down across the country, the dream of having a second home outside of the city is becoming a reality for many wealthy Americans," Marr said. "Unfortunately, at the same time, millions of less-fortunate families are behind on their mortgage or rent payments due to financial hardship brought on by the coronavirus pandemic."

Some of these second homes may eventually turn into primary homes, as it's not uncommon for a buyer to close a deal on a second home before putting their current house on the market. It seems resort towns across the U.S. have attracted more homebuyers. Hotspots include Lake Tahoe, Cape Cod, Palm Springs, the Jersey Shore, and Bend, OR.

Marr adds," Even when offices reopen, folks will be able to spend more time than ever before in their second homes because many employers will continue to offer flexible remote-work policies. With workers still commuting in one or two days a week, resort towns that are near major cities will likely continue to heat up."

Source:PRNewswire, Redfin, 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: Neutral

Mortgage rates are trending sideways to slightly higher so far today.  Last week the MBS market improved by +40bps.  This was enough to move rates lower last week. We saw moderate to low rate volatility through most of week.

This Week's Rate Forecast: Neutral

Three Things: These are the three areas that have the greatest ability to impact rates this week. 1) Coronavirus, 2) Domestic 3) thanksgiving.

1) Coronavirus: The increase or decrease in hospitalizations, cases, and closings will continue to be the major driving force in bond prices as traders digest the magnitude of the economic headwinds. We are seeing some major banks now estimating a negative GDP for the first quarter.

2) Domestic: We have a big week for economic data with major releases that have the gravitas to move rates: GDP (revised), PCE (the fed's inflation "trigger" rate), Weekly Jobless Claims, Durable Goods Orders, and more.

3) Thanksgiving: The bond market is officially closed on Thursday in observance of Thanksgiving but will reopen on Friday only to close early at 2:00 pm ET. But most traders will stop working Wednesday at 2:05 (right after the Fed's Minutes hit) and will not come back until Monday. This means very "thin" volumes on Wednesday afternoon and Friday, which can skew pricing.

This Week's Potential Volatility: High

Rate volatility could spike this week with the influx of important economic reports denoted above. Of course, the coronavirus continues to be a major factor in the movement of markets and interest rates. The bond market is closed on Thursday and will reopen on Friday for an abbreviated trading day.

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 November 23rd, 2020 3:13 PM
Daily Market Analysis

Interest rates edged a little higher this morning, stock indexes trading better at 8:00 am. This week, as you know, is a short week with Thanksgiving on Thursday and an early close Friday for the bond and mortgage markets. After Wednesday, noon markets will thin out, and many won't work until Monday next week. Wednesday is packed with critical data points; Today and tomorrow Treasury will auction $159B of notes (see calendar).

Another vaccine; AstraZeneca. The company fell behind its own forecasts over the last couple of months, but the more, the better when it comes to increased doses. It expects to have 4 million doses available in vials for the country (UK) by the end of the year, far fewer than the 30 million previously slated to be ready by September. In total, the company says it will have 20 million doses of bulk substance for the UK by the end of 2020, but those shots need to be filled into vials. By the end of the first quarter, it will have 300 million finished doses available worldwide. The vaccine uses a harmless common cold virus to deliver the coronavirus's spike protein to generate an immune response. AstraZeneca could play a key role in ending the global pandemic. It signed multiple manufacturing deals with companies and governments ranging from Japan to Russia to produce more than 3 billion doses.

More Republicans are calling for Trump to begin a transition to President-Elect Joe Biden -- or even concede defeat -- as Trump's long-shot legal challenges failed to gain traction. His various legal challenges are not going anywhere, and he is losing some of his allies. Republican Senator Pat Toomey congratulated Biden on his victory after Trump suffered another legal defeat in Pennsylvania. A minority of Republicans have spoken out, and several have taken a hedged stance that Trump should begin the transition even as the legal fight continues.

At 9:30 am ET, the DJIA opened +196, NASDAQ +77, S&P +21. 10 yr. 0.85% +2 bps. FNMA 2.0 30 yr. coupon -11 bps from Friday and -13 bps from 9:30 am ET Friday.

At 9:45 am ET, November Markit Manufacturing PMI (actual 56.7; prior 53.4) and November Markit Services PMI (actual 57.7; prior 56.9).

Eurozone's November flash Manufacturing PMI fell to 53.6 from 54.8 (expected 53.1) while flash Services PMI fell to 41.3 from 46.9 (expected 42.5). Germany's November flash Manufacturing PMI fell to 57.9 from 58.2 (expected 56.5) while flash Services PMI fell to 46.2 from 49.5 (expected 46.3). UK's November flash Manufacturing PMI rose to 55.2 from 53.3 (expected 53.3) while flash Services PMI fell to 45.8 from 52.3 (expected 52.3). France's November flash Manufacturing PMI fell to 49.1 from 51.3 (expected 50.1) while flash Services PMI fell to 38.0 from 46.5 (expected 37.7).

At 11:30 am ET, Treasury will auction $56B of 2s, then at 1:00 pm $57B of 5s.

All of this week's data happens on Wednesday. After that, the rest of the week should be quiet in the interest rate markets.

The 10 yr. note and MBSs remain in tight ranges; we are not expecting any major moves in either market through the week. MBS markets recently have performed better than treasuries, but technically mortgage prices are finding resistance when the 2.0 FNMA 30 yr. increases to 103.79 (presently 103.55). The 10 yr., is approaching its 40-day average at 0.80%; the note has not fallen below its 40 day since early August. Both technically and fundamentally still hold negative outlooks. The vaccines will continue to support the equity markets with a stronger economic outlook; interest rates will not fall much as long as the market expects a stimulus bill. The pressure is increasing from both parties to get more help quickly to suffering citizens.

PRICES @ 10:00 AM ET

10 yr. note: 0.85% -2 bp

5 yr. note: 0.38% +1 bp

2 Yr. note: 0.16% unch

30 yr. bond: 1.55% +3 bp

Libor Rates: 1 mo. 0.150%; 3 mo. 0.204%; 6 mo. 0.248%; 1 yr. 0.336% (11/20/20)

30 yr. FNMA 2.0: @9:30 103.53 -11 bp (-13 bp from 9:30 Friday)

30 yr. FNMA 2.5: @9:30 104.70 -2 bp (-5 bp from 9:30 Friday)

30 yr. GNMA 2.5 : @9:30 104.83 -9 bp (unch from 9:30 Friday)

Dollar/Yuan: $6.5774 +$0.0144

Dollar/Yen: 104.09 +0.24 yen

Dollar/Euro: $1.1852 -$0.0003

Dollar Index: 92.31 -0.08

Gold: $1844.90 -$27.90

Crude Oil: $42.85 +$0.43

DJIA: 29,501 +237

NASDAQ: 11,893 +39

S&P 500: 3577 +20

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 November 23rd, 2020 9:02 AM
Daily Market Analysis

Generally quiet in early trading this morning. Yesterday Secretary of Treasury Mnuchin surprised the Fed and markets when he announced the Treasury would end some of the emergency lending programs that were put in place last March. Jerome Powell, surprised and remarked he still wants all of the tools he has to do what may be necessary in the coming months. Mnuchin released a letter to Federal Reserve Chair Jerome Powell demanding the return of money the government provides the central bank so it can lend to certain markets in times of stress. Minutes later, the Fed issued a statement urging that “the full suite” of measures be maintained into 2021. There were the expected knee-jerk reactions in the markets, but they didn’t last long. This morning the stock indexes trading in the futures markets showed only minor changes from yesterday and interest rates fractionally lower. “I was a bit surprised” at the Treasury’s statement, Raphael Bostic, president of the Fed Bank of Atlanta, told Bloomberg TV. “Given where the economy is -- and there’s so much uncertainty still out there -- it’s prudent to keep those things open so that when people, if they do have stress, they can draw upon it.”

Biden said Thursday that he’d decided on who he will nominate as Treasury Secretary. Republicans in Congress have said the billions of dollars sent to the central bank can be deployed better elsewhere. Biden’s Treasury could agree to restart the facilities, as Mnuchin pointed to, using the Exchange Stabilization Fund. That could be one reason why credit markets may not immediately respond to the Treasury’s move. Treasury has $750B in funds to deploy that Congress approved, not sure why Mnuchin made this move now; the Fed isn’t happy, and markets so far have just yawned. Mnuchin says it isn’t political, but it is curious. There is plenty of money; Mnuchin wants Congress to re-allocate the funds and use them where most needed.

At 9:30 am ET, the DJIA opened -82, NASDAQ -6, S&P -4. 10 yr. note 0.84% unchanged. FNMA 2.0 30 yr. coupon -2 bps from yesterday’s close and +7 bps from 9:30 am yesterday.

There are no economic reports today.

Pfizer said it will apply to US health regulators on Friday for emergency use authorization (EUA) of its COVID-19 vaccine, the first such application in a major step toward providing protection against the new coronavirus, raising hopes for the end of a pandemic. The application includes safety data on about 100 children 12-15 years of age. The company said 45% of US trial participants are 56-85 years old. Of the 170 volunteers who contracted COVID-19 in Pfizer’s trial involving over 43,000 people, 162 had received only a placebo, meaning the vaccine was 95% effective, far higher than originally expected. US FDA had set a minimum bar for the efficacy of 50%. The FDA is scheduled to meet on Dec 8th. Moderna is expected to be the next company to seek a US emergency use nod for a COVID-19 vaccine. An initial analysis of data from its late-stage trial showed the vaccine was 94.5% effective. Final results and safety data are expected in the coming days or weeks.

The present concerns about the vaccines that Pfizer and Moderna have announced is distribution. Yesterday, the Trump administration held an extensive report on what Operation Warp Speed is planning, detailed plans from scientists (Fauchi and Brix), from a military general on detailed planning on distribution, saying FedEx, UPS, CVS, and Walgreens are aboard with the swift distribution.

Early this morning, when US trading started, the 10 yr. note yield dropped to 0.82%, MBS prices began +14 bps from yesterday; stock indexes were weak on the news that Mnuchin wants his money back and end some of the emergency lending programs that were put in place last March. By 10:00 am ET, markets have settled down and likely will stay calm through the rest of the day. Next week will be thin with Thanksgiving on Thursday, and not many will work on Friday; unless there is new news on the virus and vaccines next week, we expect quiet with only minor moves. The 10 yr. has technical resistance at 0.80% that should hold any improvements; the 2.0 MBS coupon has strong resistance at 103.79 price, at 103.63 presently.

PRICES @ 10:00 AM ET

10 yr. note: 0.84% unch

5 yr. note: 0.38% unch

2 Yr. note: 0.16% unch

30 yr. bond: 1.56% unch

Libor Rates: 1 mo. 0.145%; 3 mo. 0.212%; 6 mo. 0.255%; 1 yr. 0.338% (11/19/20)

30 yr. FNMA 2.0: @9:30 103.66 -2 bp (+7 bp from 9:30 yesterday)

30 yr. FNMA 2.5: @9:30 104.75 -6 bp (+5 bp from 9:30 yesterday)

30 yr. GNMA 2.5: @9:30 104.83 -17 bp (-3 bp from 9:30 yesterday)

Dollar/Yuan: $6.5628 -$0.0207

Dollar/Yen: 103.77 +0.02

Dollar/Euro: $1.180 -$0.0003

Dollar Index: 92.28 -0.01

Gold: $1875.70 +$14.20

Crude Oil: $41.66 -$0.08

DJIA: 29,409 -73

NASDAQ: 11,887 -18

S&P 500: 3574 -8

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 November 20th, 2020 9:46 AM

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