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This Week's
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Average
(by Sigma Research)
RE Report

Homebuyers increasingly opting more room, higher-priced homes

It seems the appetite for high-end single-family homes is surging across the U.S., according to a report Thursday from real estate data provider HouseCanary.

According to Realtor’s Liz Lucking, between the start of the coronavirus pandemic in March and the end of November, the number of single-family detached homes priced above $1 million to have entered contract jumped 28.8% compared to the same period last year.

“The increasing popularity for luxury homes was followed closely by those priced between $600,000 and $1 million, which have seen their contract numbers increase 26.3% over the same time,” she says, according to the report.

At the same time, single-family homes priced below $200,000 have seen contracts fall by 13.7% compared to last year, underlining the increasing desire for buyers to upgrade to larger homes with more amenities. With Americans spending more time at home and working remotely, homeowners are yearning for more square footage, home offices, more outdoor space, and features that are usually accompanied by a steeper price tag.

Lucking quotes Jeremy Sicklick, co-founder and CEO of HouseCanary: “We anticipate that the housing market will maintain the status quo through year-end, but there is strong potential for a significant shift in the new year. For now, outsized demand from home buyers is motivating sellers to maintain active listings and pushing prices on closed listings to record highs across the country.” He goes on to say that despite a turbulent election and a seasonal slowing of housing market activity, elevated demand levels continue to drive the housing market’s recovery and have largely offset the steep drop-off in new listings, contracts and closures observed recently.

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

Rates are trending sideways this morning.  Last week the MBS market worsened by -29bps.  This was enough to move rates or fees higher last week. We saw moderate volatility through most of the week.  As expected, rate volatility spiked on Friday with the jobs numbers.

This Week's Rate Forecast: Neutral

Three Things: These are the three areas that have the greatest ability to impact rates. 1) Stimulus, 2) Central Bank, and 3) Geopolitical

1) Stimulus: The ebb and flow of talking points and discussions will continue to influence bond yields, just as it did last week. For now, it appears both sides are willing to push through a $908B package that is also bundled with a new "kick the can" spending Bill that would keep the U.S. government from a shutdown.

2) Central Bank: We will get key interest rate decisions and policy statements from the Bank of Canada and the European Central Bank. The most focus will be on the ECB and any further discussion of their bond purchase program.

3) Geopolitical: Front and center is Brexit. Yes...it's still out there. There has been a barrage of news over the weekend as the deadline for a Brexit trade deal (Aka a "soft" Brexit) quickly approaches with British PM Johnson vowing NOT to further extend the deadline past December 31 and both parties threatening to pull out of negotiations. If that came to pass, it would be considered a "hard" Brexit and spell a major economic upheaval for the entire European region.

Treasury Dump: Here is this week's Treasury auction schedule.

  • 12/08 3 year note
  • 12/09 10 year note
  • 10/10 30 year bond (most important of the week)

This Week's Potential Volatility: Average

There's not a lot of economic data to worry about this week that will likely move rates. Instead, rate markets will be paying close attention to the details of the stimulus deal and continuing the Brexit saga. Of course, the 30-year bond auction could affect rates depending on how it's received.

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 December 7th, 2020 1:42 PM
Daily Market Analysis

Always at the last minute, that is how Congress works. As note last week, the stimulus bill that has been stalled for months will finally pass and be attached to the government spending bill that must pass by Dec 11th to avoid a government shutdown. Negotiators on a $908B pandemic relief package are planning to unveil more details of their proposal later today, aiming to settle on language that can satisfy enough Republicans and Democrats to secure passage of one final tranche of Covid-19 aid before Congress breaks for the year. Late last week, Pelosi and Schumer accepted, and many Republicans agreed on a bill that has taken six months to get done. The original Democrat plan was $2.4 trillion, the Republican plan $1.1 trillion. The largest disagreement was on state and local funding. Mitch McConnell "will come on board" with the plan, which he emphasized was a short-term boost for a nation still reeling from the pandemic. "This is not a stimulus bill, it's a relief bill," he said on Fox News yesterday. "And it's something for the next three to four months to help those in greatest need."

At 9:30 am ET, the DJIA opened -58, NASDAQ +11, S&P -7. 10 yr. at 9:30 0.94%. FNMA 2.0 30 yr. coupon at 9:30 am +16 bps from Friday and +6 bps from 9:30 Friday.

This week's scheduled economic releases are not major data points, although CPI and PPI are always interesting. With no immediate concerns about inflation, there isn't likely to be any reaction to the two when they hit on Thursday and Friday. The "relief" bill being tendered will be signed by Friday at the latest in combination with the debt ceiling spending bill.

Not much has been said about Brexit in the last three months, but the clock is ticking for the end of the UK in the EU (De 31st). There are still differences that have not been resolved and may not be at the deadline. Trade between the two is the standout issue; investors and banks have long predicted a trade deal would be done so that a no-deal would hit the British pound. Failure is likely to result in increased chaos in mutual trade, financial markets tumbling, and huge economic costs. Last Saturday, there was still no agreement covering annual trade worth nearly $1 trillion, and sterling has fallen against the US dollar since then. In 2016, when the UK resolved to leave the EU, its currency fell a whopping 8% against the dollar.

The changes in opinions about the economic outlook are still mostly talk and wishes; one day optimism, the next fear. With California shutting down in the big cities and virus counts increasing today, it is starting as a fear day that the economy's growth may not be what some believed one week ago. The stock indexes continue to make new all-time highs, interest rates holding bearish outlooks; consumers are beginning to worry as new stimuli have been held up. The presidential race may be over, but almost as critical now is the run-off races in Georgia. If Republicans hold on to the Senate, Biden's team won't get what many on the far left are crying for. If Democrats take control, there won't be much to stop implementing the plans outlined in the campaign. Summing it up, a lot of uncertainty hanging over markets now.

The 10 yr. note will struggle to clear 1.00%; traders, investors, money managers unwilling to buy a 10 yr. with a 1 handle. It has hit and failed at 0.98% four times, each time pulling back as it has o far today. Our outlook remains bearish but with little momentum in either direction.

PRICES @ 10:00 AM ET

10 yr. note: 0.93% -4 bp

5 yr. note: 0.39% -3 bp

2 Yr. note: 0.15% unch

30 yr. bond: 1.69% -5 bp

Libor Rates: 1 mo. 0.151%; 3 mo. 0.225%; 6 mo. 0.255%; 1 yr. 0.336% (12/4/20)

30 yr. FNMA 2.0: @9:30 103.61 +16 bp (+6 bp from 9:30 am ET Friday)

30 yr. FNMA 2.5: @9:30 104.83 +8 bp (+2 bp from 9:30 am ET Friday)

30 yr. GNMA 2.5: @9:30 104.86 +3 bp (+9 bp from 9:30 am ET Friday)

Dollar/Yuan: $6.5342 +$0.0026

Dollar/Yen: 104.02 -0.17 yen

Dollar/Euro: $1.2152 +$0.0032

Dollar Index: 90.64 -0.06

Gold: $1849.90 +$9.90

Crude Oil: $45.68 -$0.58

DJIA: 30,097 -127

NASDAQ: 12,514 +52

S&P 500: 3696 -3

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 7th, 2020 9:20 AM
Daily Market Analysis

November employment data at 8:30 am ET; fewer jobs, better income, and the unemployment rate declined. The unemployment rate fell to 6.7% from 6.9% in October; the estimate was 6.8%. Non-farm jobs were expected at 500K, as reported 245K, private jobs expected at 590K, as reported 344K, manufacturing jobs were thought to be +40K, as reported 27K. Average hourly earnings were better, +0.3% with forecasts of +0.1%, yr./yr. earnings 4.4%. The labor participation rate declined from 61.7% to 61.5%. The transportation and warehousing sector dominated hiring in this month's report. It added 145,000 jobs in November or 42% of total private-sector gains.

The initial reaction pushed the 10 yr. note yield up 3 bps to 0.94% and MBS prices down 12 bps at 9:00 am ET. Stock indexes increased slightly (DJIA +73 at 9:00 am).

Fewer jobs but lower unemployment rate; people are falling out of the job market, as evident in the labor participation rate. The increase in income is welcome, but the slow growth in manufacturing is troubling, as well as the overall job growth. We said yesterday that the data this morning would increase volatility, and it has in very early activity.

This morning, the offset to the soft employment data is an increased belief that Congress will get a stimulus bill passed. Prospects for a pandemic relief package before the end of the year grew substantially as senior Republicans warmed to the idea of using a $908B proposal from a bipartisan group of lawmakers. Pelosi and Schumer have already endorsed using the bipartisan proposal in negotiations. Utah Senator Mitt Romney: "We're getting more and more support from Republicans and Democrats." It's not only the stimulus bill, but Congress needs to pass another continuing resolution to fund the government by Dec 11th, or there would be a government shut down; that will be passed, and they may tie a stimulus bill into it.

Also supporting markets, 51 vaccine trials are happening worldwide and will be available, maybe within weeks. The U.S. government's first shipment of coronavirus vaccine doses to be divided among states and federal agencies, including the Department of Defense, will fall far short of protecting high priority groups such as healthcare workers, a Reuters analysis has found. The first shipment is expected to cover injections of 3.2 million people, nowhere near enough for the 21 million U.S. healthcare workers. Normal folks like you and me, though, won't be able to get it until late spring.

At 9:30 am ET, the DJIA opened +80, NASDAQ +15, S&P +8. 10 yr. at 9:30 am 0.96% +5 bps. FNMA 2.0 30 yr. coupon at 9:30 am -14 bps from yesterday's close, and -17 bps lower than at 9:30 am yesterday.

There's nothing left on the calendar today. The markets have digested the employment data already. The rest of the session will be focused directly on any news coming from Congress on the stimulus. We are not expecting any breakthroughs today. Next week seems more likely after the weekend conversations in Congress.

PRICES @ 10:00 AM ET

10 yr. note: 0.97% +6 bp

5 yr. note: 0.42% +3 bp

2 Yr. note: 0.16% unch

30 yr. bond: 1.74% +8 bp

Libor Rates: 1 mo. 0.152%; 3 mo. 0.225%; 6 mo. 0.257%; 1 yr. 0.336% (12/3/20)

30 yr. FNMA 2.0: @9:30 103.55 -14 bp (-17 bp from 9:30 yesterday)

30 yr. FNMA 2.5: @9:30 104.80 -6 bp (-3 bp from 9:30 yesterday)

30 yr. GNMA 2.5: @9:30 104.78 -17 bp (-14 bp from 9:30 yesterday)

Dollar/Yuan: $6.5308 -$0.0121

Dollar/Yen: 104.01 +0.17 yen

Dollar/Euro: $1.2162 +$0.0013

Dollar Index: 90.50 -0.21

Gold: $1849.70 +$8.60

Crude Oil: $45.93 +$0.29

DJIA: 30,070 +100

NASDAQ: 12,425 +48

S&P 500: 3684 +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 December 4th, 2020 9:48 AM
Daily Market Analysis

Treasuries and MBSs opened this morning unchanged. At 8:30 am ET, the stock indexes generally unchanged.

Weekly jobless claims were better than forecasts. Claims expected at 780K were 712K down 75K; the four-week average declined to 739.5K from 750.75K. Continuing claims -- the total pool of Americans on state unemployment benefits -- declined 569,000 to 5.52 million in the week. The previous two weeks' claims were slowly increasing. There was no reaction to the better outlook. The figures aren't accurately capturing how many people claim benefits after a government watchdog found the statistics to be "flawed."

A $908B stimulus package offered up by Pelosi yesterday is more than half lower than the $2.4 trillion Democrats had held to since last May. In response, McConnell said he has his own proposal. However, it is about the same as Republicans have held to for months, $500B. The Senate is up in the air; the results of two senate seats in Georgia, if won by Republicans, won't increase Pelosi's leverage (if she has any now). Biden called on Congress to pass a "robust" aid bill without offering specifics of how big it should be or what measures it ought to contain.

At 9:30 am ET, the DJIA opened +58, NASDAQ +46, S&P +5. 10 yr. at 9:30 am 0.93% -1 bp. FNMA 2.0 30 yr. coupon at 9:30 +5 bps from yesterday and +8 bps from 9:30 yesterday.

At 9:45 am ET, the Nov PMI composite estimate 57.9 from 56.9 in October; as reported, the index increased to 58.6. China's November Caixin Services PMI rose to 57.8 from 56.8 (expected 56.5). Japan's November Services PMI ticked up to 47.8 from 47.7 (expected 46.7). Hong Kong's November Manufacturing PMI rose to 50.1 from 49.8. Germany's November Services PMI fell to 46.0 from 49.5 (expected 46.2). U.K.'s November Services PMI fell to 47.6 from 51.4 (expected 45.8). France's November Services PMI fell to 38.8 from 46.5 (expected 38.0). Italy's November Services PMI fell to 39.4 from 46.7 (expected 41.3). Spain's November Services PMI fell to 39.5 from 41.4 (expected 36.6).

At 10:00 am ET, the Nov ISM non-manufacturing index was expected at 56.0 from 56.6 in October; as released, the index 55.9.

The House and Senate still have to pass a continuing spending bill by Dec 11th, or the government will shut down. Media makes it a potential disaster every time Congress has to kick the can and pass a continuation bill adding enough funds to carry through to the next time it comes up. At the end of the day and before Dec 11th, a deal will get done.

Not many are doing holiday shopping in stores this year; online shopping is a new way, driven by the virus, setting a new path for the future.

Tomorrow, the Nov employment data; today should be quiet ahead of it.

PRICES @ 10:10 AM ET

10 yr. note: 0.93% -1 bp

5 yr. note: 0.40-% -1 bp

2 Yr. note: 0.15% -2 bp

30 yr. bond: 1.67% -2 bp

Libor Rates: 1 mo. 0.152%; 3 mo. 0.230%; 6 mo. 0.258%; 1 yr. 0.334% (12/02/20)

30 yr. FNMA 2.0: @9:30 103.72 +5 bp (+8 bp from 9:30 yesterday)

30 yr. FNMA 2.5: @9:30 104.83 unch (+6 bp from 9:30 yesterday)

30 yr. GNMA 2.5: @9:30 104.91 -12 bp (unch from 9:30 yesterday)

Dollar/Yuan: $6.5451 -$0.0183

Dollar/Yen: 103.83 -0.58 yen

Dollar/Euro: $1.2158 +$0.0040

Dollar Index: 90.68 -0.44

Gold: $1838.70 +$8.50

Crude Oil: $45.06 -$0.22

DJIA: 29,987 +104

NASDAQ: 12,419 +70

S&P 500: 3675 +6

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 3rd, 2020 9:36 AM
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
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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

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

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