Friday – April 17, 2020

Plans and guidelines to reopen the U.S. economy along with a report out that a new drug could treat the virus are fueling the risk-on trade today. The White House announced guidelines last night to reopen the U.S. economy in three phases in an effort to restart the world’s largest economy. State governors will have the call as to when their states will reopen.

Gilead Sciences antiviral drug remdesivir, has shown promise for the treatment of the coronavirus and is causing “rapid recoveries in fever and respiratory systems with nearly all patients discharged in less than a week” in patients at a Chicago hospital, medical site STAT reported. A treatment is a game-changer folks and would go a long way to opening up our economy to full strength.

Ellie Mae reports that lower rates have pushed the number of refinancing closings rose while purchase closings slowed due to restrictions associated with COVID-19. Refinancing closings were 55% in March of total closings versus 51% in February while purchase closings were 45% from 49%. Jonathan Corr, President and CEO of Ellie Mae said, “Despite the impacts of the coronavirus and stock market fluctuations, our lenders are leveraging technology to manage borrower demand for refinances while taking into account the health and safety of all players in the mortgage origination process.”

Courtesy of Mortgage Market Guide

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Thursday – April 16, 2020

New home-building activity plunged in March from February as the coronavirus fears spread throughout the nation. The Commerce Department reports that Housing Starts fell 22% last month from February to an annualized rate of 1,216,000 versus the 1,300,000 expected. It was the largest decline since March 1984. Starts were up 1.4% from March 2019. Single-family starts, which make up a bulk of the sector, fell 17.5% while multi-family dwellings declined 32%. Housing Starts fell across all four regions of the country.

Americans filing for first-time unemployment benefits rose to 5.245 million for the week ended April 11, above the 5 million expected to bring the four-week total to nearly 22 million. It was a decline of 1.37 million from the previous week. The unemployment numbers have been pushed higher by recent measures to allow more workers to file that now includes independent contractors and others who previously would not qualify for benefits. The four-week moving average of claims, which usually irons out seasonal abnormalities, rose to 6.066 million, a jump of 2.568 million from the previous week.

There is also additional fallout from the coronavirus. The April Philadelphia Fed Manufacturing Index came in at a negative 56.6, the lowest since 1980. Oil prices are hovering near 20-year lows at $20/barrel for West Texas Intermediate due to falling demand and higher supplies. The average price for a regular gallon of gasoline is at $1.86 with spots around the country even lower. Airlines have cut 90% of flight schedules with ultra-low fares now seen. Retailers will have to slash prices once the economy opens. The White House is expected to discuss plans for reopening the economy with governors today.

Courtesy of Mortgage Market Guide

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Wednesday – April 15, 2020

Due to the continued economic fallout and uncertainty from the coronavirus, mortgage rates fell modestly in the latest survey. The Mortgage Bankers Association (MBA) reports that the 30-year fixed-rate mortgage fell four basis points in the latest week to 3.45% in the week ended April 10. It was the lowest rate in the MBA’s survey history. The Market Composite Index, a measure of total mortgage loan application volume, rose 7.3%, the Purchase Index fell 2% while the Refinance Index increased 10%.

The fallout from COVID-19 continues to wreak havoc on economic numbers as well as early earnings reports. After last week’s staggering 700K jobs lost in March, March Retail Sales fell 8.7%, the biggest decline since the government started tracking it in 1992. The Empire State Manufacturing Index plunged 78.2 this month, also the worst reading in its history. Incoming economic data in the next month will be simply awful and virtually impossible to forecast.

Piling on was the CDC Director Dr. Robert Redfield saying a coronavirus second wave is “definitely” coming while experts predict rolling lock downs until 2021. Weak earnings reports were seen from Goldman Sachs, Citigroup and Bank of America with the two banks looking for a wave of loan defaults in the coming months. And if that were not enough, a barrel of oil has fallen below $20 a barrel, despite Saudi Arabia and Russia agreeing to cut production. The complete lack of demand and rising supply is causing prices to fall precipitously.

Courtesy of Mortgage Market Guide

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Tuesday – April 14, 2020

Mortgage applications to purchase new homes unexpectedly rose in March from February due in part low rates and strong economic conditions at the start of the month. The Mortgage Bankers Association’s (MBA) Builder Application Survey showed that new home purchase applications rose 14% last month and was up 21% from a year ago. The MBA expects that new home purchases in April will decrease.

The Mortgage Bankers Association reports that the number of mortgage loans requesting forbearance continues to increase. The total number of loans in forbearance rose from 2.73% to 3.74% during the week of March 30 to April 5, 2020. Mortgages backed by Ginnie Mae had the largest weekly growth and the highest overall share in forbearance requests by investor type, while independent mortgage bank (IMB) servicers continue to have a higher share of loans in forbearance.

The major U.S. stock indexes are higher today as reports continue to reveal that more U.S. states are setting sights on reopening their respective economies as the virus numbers decline. In addition, President Trump said he hoped a return-to-work plan might be “ahead of schedule.” Add in the huge and growing stimulus package and there is virtually “trillions” of reasons for stocks to be optimistic. The Dow Jones Industrial Average is up 500 points in morning trading.

Courtesy of Mortgage Market Guide

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Monday – April 13, 2020

Fears of an increased likelihood of forbearance and defaults along with a drop in liquidity sent mortgage credit availability plunging in March. A decline in the index indicates lending standards are tightening, while increases are indicative of loosening credit. The Mortgage Bankers Association reports that its Mortgage Credit Availability Index (MCAI) fell by 16.1% to 152.1 last month, the lowest level since June 2015, with declines seen across all loan types. Within the report, it showed that the Jumbo MCAI fell nearly 37%.

The Fed, as well as Congress, have put forth extraordinary measures in the past few weeks in an effort to aid Americans as well as small businesses that have been and continue to be negatively financially impacted by the coronavirus shutdown. Individual taxpayers who make less than $75,000 will be eligible for $1,200 checks, and married couples filing jointly who make less than $150,000 will get $2,400. They will also be eligible for $500 for each dependent child under 17. The income amounts are based on tax returns filed for 2018 or 2019.

Gas prices at the pumps continue to decline due in part to lower oil prices as demand declines. The national average price for a regular gallon of gasoline fell to $1.86 on Monday, down from $2.30 a month ago. Trilby Lundberg, an industry analyst says, “Gas prices have declined over the past seven weeks as demand declines amid widespread stay-at-home orders during the coronavirus pandemic.” The highest price ever recorded was in July 2008, at $4.11.

Courtesy of Mortgage Market Guide

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