Mortgage News Weekly 11/23/20

In This Issue…

A Look Into the Markets

Mortgage Market Guide Candlestick Chart

Economic Calendar for the Week of November 23 – November 27

A Look Into the Markets

The Tug-of-War Continues

Stocks, Bonds, and rates are responding to the tug-of-war playing out between vaccine hopes and the rise in COVID-19 cases, along with additional lockdowns.

Pfizer was out this past week saying its vaccine has a 95% effectiveness rate. Moreover, the firm says they will have 50 million doses available before year-end and as much as 1.3 billion doses available in 2021.

On top of this, Moderna has a very effective vaccine and there are dozens of firms ready to deliver additional doses and therapeutics.

Stocks and rates have moved higher because both are forward-looking. Yes, the rise in cases and hospitalizations is a concern, but at the moment the markets are looking four to six months down the road and there is hope that with a high vaccination rate we can return back to normal sometime in 2021.

Home Builders Are Very Bullish

Single-family Housing Starts showed the highest reading since 2007! Historically low interest rates and shifting demand to move to the suburbs are the drivers.

The main challenge for builders is keeping up with the demand. Available lots and decreased availability of supplies are headwinds for builders.

One thing is for sure: If land and materials are scarce, expect new home prices, currently averaging $326,000, to continue to climb.

Bottom line: Rates hit historic lows, as reported by Freddie Mac, this week. With a vaccine and more stimulus on the way, it may be difficult to see rates improve much, if at all. If you or someone you know would like to talk about the incredible opportunity, please contact me.

Looking Ahead

In addition to tracking the aforementioned tug-of-war, next week’s Thanksgiving shortened week brings Durable Goods, GDP, PCE, and another huge round of Treasury supply (which has been pressuring Treasury yields higher). In a holiday week, we sometimes see extraordinary market turbulence — so stay tuned.

Mortgage Market Guide Candlestick Chart

The candlestick chart below shows prices on the right side of the chart reaching up to similar peaks seen two other times earlier this year. What we are seeing is a potential “Triple Top” where prices reach up to previous price peaks only to fade lower. If prices can break above this resistance at multiple price peaks, there would be room for even further rate improvement. The opposite is also true.

Chart: Fannie Mae 2.5% Mortgage Bond (Friday, November 20, 2020)

Economic Calendar

For the Week of November 23 – November 27