Mortgage Mike’s Daily Rate Commentary

The stock market continues to rise this morning on improving inflation figures that we will get to in a minute! As we have said, the stock market is not a reflection of the economy in general and that is especially true in 2020 as armature traders are setting record trading volumes. Despite the election debacle and the country shutting down once again, over 26 billion shares were traded in the last 2 days as the Dow topped out just above 30k. This is a 72% increase in trading volume from these days last year when the market had much more tangible value.

Moving with last week’s momentum, Continuing Jobless Claims rose this week. This week’s addition of 30k took our total to a 5 week high of 778k. It is likely that we will continue to see this number tick up as a consequence of the continued restrictions to fight the second wave of COVID.

Mortgage backed securities got a bit if a boost this morning after the PCE numbers came in showing a slow in inflation. The Headline number dropped from 1.4% to 1.2% last month. Mortgage backed securities are heading toward a ceiling that has been tested and held strong 3 or 4 times in November. We are holding a locking bias because breakouts are the exception and not the rule – bouncing off of this ceiling may push mortgage backed securities down.


Have a great Thanksgiving everyone!

Stocks are up this morning after the previous Fed Chairman, Janet Yellen, was appointed by President Elect Biden as our next Treasury Secretary. It seems like the market liked the fact that we will have such an experienced person in the treasury seat as the S&P is up over 150 bps.

As we talked about yesterday, this is a big news week! Appreciation did not disappoint coming in at 7% YTD across the US according to Case-Shiller while homes with exclusively conventional loans are up 9% YTD according to the FHFA. One of the biggest factors that has led to the massive amount of appreciation is the lack of supply across the market. Housing bulls are relying on a continued tight supply to fuel appreciation. Good news for them – single family building permits held flat in October opposed to the growth that we have seen throughout the pandemic, hinting at the fact that they may stay low throughout the winter. Bulls believe this will drive supply lower and appreciation higher.

We talked about this yesterday but I want to make sure everyone sees it, tells their family or tells their dog – we are once again able to refinance while paying for the clients fees in many cases if their rate is over 2.99%. You can click on our Find Your Best Rate Tool to see if we can save you some money!

Have an awesome day!

Stocks are up this morning in response to some great news regarding the distribution of the COVID. Moncef Slaoui, a chief advisor of Operation Warp Speed, claimed that the Pfizer vaccine should begin distribution to the general public by mid-December. Slaoui went on to say that if distributions of the vaccine go as planned, the US will have enough people vaccinated by May 2021 for life to begin to go back to normal. In addition, AstaZeneca, the third company to release a vaccine with over 90% efficiency, finished their clinical testing and is creating distribution plans as it waits for approval. Now, nobody knows how this is actually going to play out, but the stock market is showing hope.

Like we talked about on Friday, despite the short week, we will be getting appreciation data, GDP, new home sales and PCE later this week.

Mortgage backed securities are down this morning in response to all of the positive COVID data that came in over the weekend. Because of the expected volatility caused by more news about the vaccine and the large amount of room that mortgage backed securities have to the down side before their next floor, we are holding a locking bias.

This morning we got a pricing update! We are once again able to pay your closing fees on some refi products – you pay nothing at the closing table. We do not know how long we will have access to this pricing so check out our Find Your Best Rate tool on our website. If your rate is over 2.999%, we may be able to save you money every month with no out of pocket cost!

Some interesting news in the market this morning as Jerome Powell and Steven Mnuchin clash after Mnuchin declined to extend multiple COVID relief programs claiming, “they have clearly achieved their objectives”. The Fed, in vocal opposition of Mnuchin’s statement said, “The Federal Reserve would prefer that the full suite of emergency facilities established during the coronavirus pandemic continue to serve their important role as a backstop for our still-strained and vulnerable economy”. Both Powell and Bostic (who we talked about earlier this week) of the Fed claim that there are still many tools that can be used in a healthy way to continue the stable recovery of the economy fearing a drastic increase in the cost of capital for banks and businesses if Mnuchin is wrong. It will be interesting to see if President Elect Biden will take the side of the Fed and extend these programs or agree that the stimulus has served its purpose.

Next week we will be getting appreciation numbers. This is going to be an important figure that will help with the distinction between appreciation and the rising median home value that we talked about a couple of weeks ago. We will also get PCE numbers for inflation. It will be interesting to see how the recent restrictions will effect the 1.4% inflation that we have seen in the last 5 months.

Mortgage backed securities continue to climb pushing mortgage rates lower. We are holding a locking bias going into the weekend to secure the gains seen this week and take advantage of our ability to pay your fees on some refi options.

Atlanta Federal Reserve President, Raphael Bostic, addressed the Fed’s continued role in our recovering economy this morning after sobering retail sales figures were released for last month. Bostic reassured that the central bank is prepared to provide economic stimulus through multiple avenues as it looks like the US moves toward the eye of the COVID storm. While Bostic expects a “robust recovery” once the vaccine is able to be distributed to the masses but spoke of the, “short-term and intermediate-term concerns with the spike in the virus and what that’s going to do for business in terms of the things that they’re able to produce, in terms of consumers and their willingness to go out and buy things”. While Bostic did not specifically mention if the Fed will continue to purchase assets or mention any other stimulus tool it will use, he said, ““we are committed to using all of our tools. They have some juice and we’ll deploy them as necessary”.

Stocks are down this morning after yesterday’s rally while mortgage backed securities continue yesterday’s upward trend. We are holding a locking bias due to the number of large pending news stories surrounding the COVID vaccine unless you are able to closely monitor the market.

The S&P is up over 100 bps this morning following Moderna’s phase 3 results. The drug company experienced over 94% effectiveness with their COVID vaccine. In addition, unlike the Pfizer vaccine which has to be stored at -90 degrees Fahrenheit, the Moderna vaccine appears to be distributed much easier as it can be stored at room temperature for a certain amount of time and at a regular refrigerator temperature otherwise. As discussed in previous commentary posts, advances in a COVID vaccine is one of the forces that hold the most weight over mortgage rates, we expect to see a rise at least in the short term.

Disregarding the jump in the stock market, mortgage backed securities are holding onto last weeks gains. Of course, this is partially due to the Fed continuing to buy up securities. We are holding a locking bias to take advantage of last weeks pricing even as the stock market rallies.

About two weeks ago, we talked about the rapid increase in inflation the US saw over the last five months showing a 1.4% gain with a 2% annual Fed target. This morning, we got the Consumer Price Index report which showed Octobers inflation held just about flat from September. This abrupt slowdown in inflation is influenced by a number of factors; however, the likely leader is the fear of another economic shutdown as COVID spikes across the nation.

We also got jobs numbers in today. The Initial Jobless Claims came in lower than expected at 709k new claims last week. While these jobless claims number are improving slowly, this is a positive sign for the recovery of the economy especially when paired with the decreasing continuing claims number of 6.8 million.

Mortgage backed securities are up this morning. However, we are aiming for a double ceiling that may cause some turbulence. We hold a locking bias.

Good morning everyone!

Following yesterday’s volatility, the S&P is down over a half a point – largely led by losses in many of the “stay at home stocks” that were hit following yesterday’s promising news regarding Pfizer’s 90% effective Covid vaccine. We expect to see more volatility in the short term as additional news comes out on Pfizer’s vaccine as well as other companies that are in the vaccine race. Moderna is one who will be releasing results from their final stage of clinical testing in the middle of November who’s market impact could mirror Pfizer’s.

Now that President Elect Biden is set to take office in January, we need to address his tax plan that is dominating the news again. This plan includes a credit of $15k for home buyers. This sounds like a great deal of stimulus that would be great for the economy on a surface level; however, it is important to consider the state that our market is in. Given that the US already has a housing shortage, the median age for first time homebuyers is dropping across the country, and we have seen home appreciation unlike any year since preceding the Great Recession – we see this credit further inflating the housing market. Similar to how home appreciation rises when rates drop because people can now afford a more expensive house, this bill will push peoples ability to afford homes up with a seeming disregard for inflation.  The last time the US gave a credit for home purchases, the market flooded with buyers, inflated the market and then left a hole which led to a worse housing market than when the credit was initiated. Hopefully Biden’s administration will look back 10 year and ensure they hedge against this risk.

Mortgage backed securities are down again today after yesterdays large loss. They fell below their 100 DMA and are now stuck between their 25 and 200 DMA. Ten year bonds have potential on the upside in the near future which would push mortgage rates higher. Like yesterday, we recommend to lock unless you are able to monitor the market.

Mortgage backed securities are down big this morning following the announcement that President Elect Biden will take office in January as well as large advancements in the COVID vaccine. Pfizer, one of the leading candidates in the vaccine race, released news claiming their 2- dose vaccine was effective 90% of the time in their clinical trials. This is amazing for the world as well as the future of the US economy.   While the S&P surged over 3% this morning in response to these two pieces of news, mortgage backed securities fell around 60 bps. Like we have talked about for months now, the two news releases that would hold massive weight in regards to mortgage rates were the presidential election as well as advancements in a COVID vaccine. We got both within the last week and expect further rate volatility in the near term.

With such a large erosion of mortgage security pricing, we are holding a locking bias unless you are able to closely watch the market.

We got some relieving news in the job market this morning. On Wednesday, we addressed how the ADP National Employment Report came in low and we hoped that the BLS report looked more optimistic as it holds more weight in the market. The BLS expectation for jobs created in October was 600k while the report came in about 6% higher at 634k jobs created. In addition to this gain in jobs, we saw a full point decrease in the unemployment rate. The last report showed 7.9% and expectations were that it would fall to 7.7%. Instead, it fell to 6.9% – a 224m increase in employment.


Forbearances across the country are down to their lowest point since the pandemic started. Active plans fell by 137k (5%) during the week to 2.86m. At the beginning of October, 700k active plans had been set to expire between the beginning of October and the end of November.


Mortgage backed securities are down this morning after Wednesdays huge gain. Mortgage backed securities have a good amount of room to fall before they have a recently tested floor of support. Because of this, we are holding a strong locking bias.