Good morning everyone!
There’s good news for short term mortgage rates but bad news for the US and the stock market as Nancy Pelosi and Steven Mnuchin were not able to come to an agreement for the next stimulus bill yesterday. Now, with the Senate on leave until Nov. 9th, it looks like we will not have another stimulus bill until after the election. News surrounding a potential plan created quite a bit of volatility in mortgage rates in the past weeks. We expect to see stability in the short term; however, once the stimulus conversation resumes in mid-November, we expect more volatility. In addition, Moderna – one of the front runners in the COVID -19 vaccine race will release results based on their drug in its phase three trial. This has potential to add to the expected volatility in November.
As the purchase market continues to grow, homeownership at younger ages is exploding. Q2 of 2020 was the US peak of homeownership since 2008 preceding the Great Recession. Homeownership rates among those under 35 grew from 37.5% to 40.2% according to the US Census Bureau.
Mortgage backed securities were not able to rise above their double ceiling that we talked about yesterday. They remain slightly under their 25 and 50 DMA. They also have a strong double floor of support. Mortgage backed securities are not currently pinched between the two, however, if they remain in the middle of these strong support levels, we can expect a strong breakout one way or the other.