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By Taff Weinstein at

Lumber Prices Surge in 2020

The rebounding home construction business has gotten antsy over lumber costs. Between April 1 and Aug. 27, commodity traders bid up lumber to $850 per 1,000 board feet from $260 according to MacroTrends.

That’s a 227% jump up off a four-year low to a record high.

The National Association of Home Builders estimates lumber’s spike would add roughly $16,000 in costs to a typical newly built home of just under 2,500 square feet in size.

With more people working from home — not to mention home-schooling their children — new housing and remodeling efforts have become big priorities.

The rush for wood has been amplified by unexpected projects such as building outdoor seating for restaurants who were banned from serving indoors.

In 103 trading days, the commodity market price more than tripled to $850, easily topping May 2018’s old high of $639 along the way.

By Taff Weinstein at

Housing Affordability Improves

The Data & Analytics division of Black Knight, Inc., released its latest Mortgage Monitor Report, As 30-year interest rates hit a record low in recent weeks, Black Knight looked at the impact this has had on refinance incentive, affordability levels, and their broader impact on the mortgage and housing markets.

As Black Knight Data & Analytics President Ben Graboske explained, “Despite eight consecutive years of rising home prices, July’s record-low mortgage rates, which fell below 3% for the first time on July 16, have made purchasing the average-priced home for a median wage earner the most affordable since late 2016. Falling rates and improved affordability have helped to spur home-buying demand, and therefore purchase origination volume, which has provided a much-needed backstop for home prices in the wake of the COVID-19 pandemic.

“As of mid-July, it required 19.8% of the median monthly income to make the mortgage payment on the average-priced home purchase, assuming a 20% down payment and a 30-year mortgage. That was more than 5% below the average of 25% from 1995-2003. This means it currently requires a $1,071 monthly payment to purchase the average-priced home, which is down 6% from the same time last year, despite the average home increasing in value by more than $12,000 during that same time period. In fact, buying power is now up 10% year-over-year, meaning the average home buyer can afford nearly $32,000 more home than they could at the same time last year, while keeping their monthly payment the same.
 

  • While home prices have risen for 97 consecutive months, July’s record-low mortgage rates have made purchasing the average-priced home the most affordable it’s been since 2016
  • Buying power for those shopping for a home is up 10% year over year, with home buyers able to afford nearly $32,000 more home than they could have 1 year ago while keeping their monthly payment the same
  • Each of the 25 largest markets are seeing their strongest affordability in more than 2 years, with falling 30-year rates elevating buying power for potential homeowners across the country
  • Six states – Louisiana, Arkansas, Iowa, West Virginia, Kentucky and Maryland – are seeing their lowest payment-to- income ratios in more than 25 years
  • While the fallout from COVID-19 continues to weigh on the broader economy, record-low mortgage rates and improved affordability appear to be providing a backstop for the mortgage and housing markets, with 19 of the 22 major markets analyzed seeing their median price per square foot rise from May to June
What Happened to Rates Last Week?

Mortgage backed securities (FNMA 2.500 MBS) gained +55 basis points (BPS) from last Friday's close which caused fixed mortgage rates to move to a new all-time record low.

Domestic Flavor:

Jobs, Jobs, Jobs: Initial Weekly Jobless Claims continue to trend above 1.4M each and every week with 1.434M new filings vs est of 1.450M. Continuing Claims climbed back above the 170 mark with 17.018M vs est of 16.2M.

The Talking Fed: The Federal Reserve kept their key Fed Funding Rate at 0.25%.
Here are some key points from the statement and Fed Chair Powell's comments:
  • Powell said " We are not even thinking about, thinking about when to raise rates"
  • "The path of the economy will depend significantly on the course of the virus"
  • "The ongoing public health crisis will weigh heavily on economic activity, employment, and inflation in the near term, and poses considerable risks to the economic outlook over the medium term"
  • Powell said that the full amount of their emergency lending facility has been under utilized due to the fact that the Fed has stabilized commercial lending and companies have access to credit again under normal channels so the emergency lending via the Fed is not need as much.

GDP: The preliminary 2nd QTR GDP showed a contraction of -32.9% which is the worst on record. The consensus estimates were for 34%. The Prices Paid turned deflationary at -2.1% vs est of +1.9%. The Great Recession of 2007-2009 saw GDP fall by -4.3%
 
Personal Income and Outlays: June Personal Incomes dropped by -1.1% which was larger than the consensus estimates of -0.5% and follows a contraction in May of -4.4%. Personal Spending increased by 5.6% vs est of 5.5%

Inflation Nation: The Fed's key interest rate gauge, Personal Consumer Expenditures (PCE) showed no threat of inflation with the headline YOY PCE at 0.8% vs est of 0.5%. Core YOY PCE was only 0.9% vs est of 1.0%.

Manufacturing: July Chicago PMI broke back into expansionary territory with a 51.9 vs est 43.9 reading.

Consumer Sentiment: The July Final reading was revised to 72.5 vs est of 73.0


What to Watch Out For This Week:

 


The above are the major economic reports that will hit the market this week. They each have the ability to affect the pricing of Mortgage Backed Securities and therefore, interest rates for Government and Conventional mortgages. I will be watching these reports closely for you and let you know if there are any big surprises.

It is virtually impossible for you to keep track of what is going on with the economy and other events that can impact the housing and mortgage markets.  Just leave it to me, I monitor the live trading of Mortgage Backed Securities which are the only thing government and conventional mortgage rates are based upon.

By Taff Weinstein at

Top Ten States for Tiny Home Living

For those who have considered downsizing - HomeAdvisor has compiled a list of the most popular states for tiny home living. The site used geolocation data from Instagram posts containing the #tinyliving hashtag was used to determine the best areas.

The #tinyliving movement may sound cute, but it is driven by a fierce desire to minimize waste and energy usage. This is for the good of the planet and for the tiny homeowner’s personal economy. Lester Walker’s 1987 guide to building tiny houses kickstarted the movement.

HomeAdvisor's top ten most popular US states for tiny home living:

  1. California
  2. Florida
  3. Colorado
  4. Texas
  5. Oregon
  6. Washington
  7. Arizona
  8. North Carolina
  9. New York
  10. Utah

By Taff Weinstein at

Home Flipping Surges to 14 year High

Investors rushed to snatch up properties to resell for a profit. Home flipping comprised 7.5% of all home sales during the first quarter, up from 7.3% a year prior, ATTOM Data Solutions reports in its 2020 Home Flipping Report. It defines a house flip as a purchase and sale within 12 months.

The gross profit on a typical property flipped nationwide (the difference between the median sales price and the median paid by investors) rose in the first quarter to $62,300. However, due to rising home prices, that profit for investors equated to about 36.7% return on investment compared to the original purchase price, which is down from 40.9% a year earlier.

“Home flipping has gradually taken up a larger portion of the housing market over the last couple of years,” says Todd Teta, chief product officer at ATTOM Data Solutions. “But profits are down and are lower than they’ve been since the dark days following the Great Recession, which is a sign that investors aren’t keeping up with price increases in the broader market. Enter now the coronavirus pandemic and the prospects for home flipping are notably uncertain, at least in the short term. We should know a lot more in a few months about whether home prices drop and investors get hard hit, or whether they can increase their profit margins.”

59.5% of homes flipped were purchased with all-cash. Investors also took an average of 174 days to complete a flip, slightly down from 180 days a year prior.


What Happened to Rates Last Week?

Mortgage backed securities (FNMA 2.500 MBS) gained +55 basis points (BPS) from last Friday's close which caused fixed mortgage rates to edge slightly lower compared to the levels of the prior week

Domestic Flavor:

The Talking Fed: We had our FOMC Interest Rate Decision and Policy Statement on Wednesday along with their economic projections, followed by a live press conference with Fed Chair Powell at 2:30.
Here are some key highlights:
 
  • They kept their key interest rate at 0.25%
  • They announced that they would keep direct Treasury purchases at a pace of $80B per month and MBS at a pace of $40 per month but from June to July, that pace will be $96B of MBS due to reinvestment of principals received. You can read their official asset purchase program details here.
  • The median "guestimate" of the FOMC members are -6.5% GDP for 2020 and then +5.0% GDP in 2021 and +3.5% in 2022
  • Fed's Fund Rate to remain at 0.25% through 2022
  • Unemployment Rate for 2020 9.5%, 2021 6.5% and 2022 5.5%
  • Core Inflation to remain well below their target rate of 2%. 2020 1.0%, 2021 1.5% and 2022 1.7%
Inflation Nation: The May Consumer Price Index (CPI) showed no threat of inflation. The YOY Headline reading was just 0.1% and the Core (ex food and energy) increased by just 1.2%. Both readings were a tenth below market expectations. The May Producer Price Index (PPI) showed no threat of inflation. The YOY Headline reading was -0.8% which was a nice improvement over April's -1.2% level but its still in the red. Core (ex food and energy) increased by just 0.3%. vs est of 0.4%

Jobs, Jobs, Jobs: Initial Weekly Jobless Claims hit 1.542M vs est of 1.500M, so right as expected. Continuing Claims moved to 20.929M vs est of 20.000M, so a little higher than expected. The May JOLTS (Job Openings and Labor Turnover Survey) showed that there were 5.046M unfilled jobs vs est of 5.00M
 

What to Watch Out For This Week:

 


The above are the major economic reports that will hit the market this week. They each have the ability to affect the pricing of Mortgage Backed Securities and therefore, interest rates for Government and Conventional mortgages. I will be watching these reports closely for you and let you know if there are any big surprises.

It is virtually impossible for you to keep track of what is going on with the economy and other events that can impact the housing and mortgage markets.  Just leave it to me, I monitor the live trading of Mortgage Backed Securities which are the only thing government and conventional mortgage rates are based upon.

By Taff Weinstein at

Is it time for a Pool?

Types of different inground pools

With Summer right around the corner (no really) and many public pools closed or restricted this season for social distancing, having your own pool in your back yard is an option that many homeowner's are considering.

There are three main types of inground pools, we have made it easy for you to understand the differences with our quick list (they are listed top-down from least expensive to the most expensive options.)

Vinyl: Pools that are lined with vinyl are built with metal or plastic frames above ground or set into the excavated hole. Prefab supporting walls or panels made of plastic, steel, or aluminum are joined to the frame, making a form that is then lined with heavy vinyl to form the pool shell. The bottom of a vinyl liner sits on a bed of sand or other material, while the top is held down by the coping, which creates a finished edge and also acts as a border for the pool deck. Like other materials, vinyl deteriorates with longtime exposure to the elements along with pool chemicals. Some liners come equipped with fungus and UV inhibitors, which can extend the life of a vinyl liner from 10 to about 18 years or so.

Fiberglass: A swimming pool made of fiberglass will be sold as a large one-piece shell that arrives at your home by truck and then is positioned in the excavated hole with the help of a crane. Unlike concrete pools, fiberglass pools are ready-made, making it rare to request a customized design. Most fiberglass manufacturers offer many models and sizes to choose from. Steps, spas, and benches are usually pre-formed. Fiberglass makes the pool-building process quick and easy. Its smooth interior surface is slick, making it tough for algae to cling to. However, fiberglass can be more costly. After 10 to 15 years of exposure to sun and chemicals, the fiberglass deteriorates. Recoating it is not easy because the new coating does not stick easily to the older one.

Concrete: Using steel-reinforced concrete to form a shell, concrete and plaster are the most common in-ground pool-building materials and were the first ones used when residential pools became popular.  Here's how it works: after a hole has been excavated in a yard, the sides and bottom of the hole are lined or framed with rebar (steel rods). These can be sculpted into nearly any shape conceivable (from rectangles to boomerangs to hearts and guitars), along with adding steps, ramps, and other features.

By Taff Weinstein at

Construction Costs Breakdown

What goes into the cost of construction a home?

According to the 2020 Cost of Constructing a Home by the National Association of Home Builders, interior finishes, at 25.4 percent, accounts for the largest share of construction costs.

Their findings also show that, on average, 61.1 percent of the sales price goes to construction costs and 18.5 percent to finished lot costs. On average, builder profit is only 9.1 percent of the sales price.

With the average lot size at 22,094 and home size on that lot of 2,594 square feet, here are some break downs of construction costs:

  • Site Work (permit, Architecture, Engineering, etc) fees 6.2%
  • Foundations 11.8%
  • Framing 17.4%
  • Exterior Finishes 14.1%
  • Major Systems (HVAC, Plumbing, Electrical, etc) 14.7%
  • Interior Finishes (Drywall, cabinets, appliances, flooring, etc) 25.4%
  • Final Steps (landscaping, driveway, etc) 6.8%
  • Other/Misc 3.8%


What Happened to Rates Last Week?

Mortgage backed securities (FNMA 2.500 MBS) gained just +10 basis points (BPS) from last Friday's close which caused fixed mortgage rates to remain at the same levels as the prior week.

Domestic Flavor:

Manufacturing: The national ISM Manufacturing Index for April was better than expected with a 41.5 vs 36.9 reading. However, this is one of the worst levels in many years and shows severe contraction in the manufacturing sector. Prices Paid were 35.3 vs est of 35.0 and the Employment Index dropped from 43.8 down to only 27.5. The bell-weather Chicago PMI April reading was dismal at 35.4 vs est of 38, the worst level since 2009.

Construction Spending: The March reading surprised to the upside with a +0.9% reading vs est of a drop of -3.5%. However, much of the March gain was due to a big revision lower to February's reading.

Income vs Spending: Personal Incomes dropped -2.0% vs est of -1.5%, it was the biggest drop in MOM income since March 2013. Personal Spending fell into a bottomless pit, dropping by -7.5%.

GDP: The Preliminary 1st QTR GDP showed a contraction of -4.8% which is the worst since the financial crisis. The markets were expecting a range of -4.0% to -5.0%. Prices Paid (a measure of inflation) was actually higher than expected 1.4% vs est of 1.2%.

Central Bank Palooza: The European Central Bank kept their key interest rate at 0.0%, ECB Chief Lagarde warns GDP to shrink by -12% in 2020.

The Talking Fed: The Federal Open Market Committee (FOMC) kept their key interest rate at 0.25%.Here are some key highlights of the statement and live comments by Fed Chair Powell:

 

  • Powell said that the Fed would continue to purchase MBS as "needed" and "appropriate", not laying out a long term schedule or guaranty of min purchases.
  • The Committee will continue to monitor the implications of incoming information for the economic outlook, including information related to public health, as well as global developments and muted inflation pressures, and will use its tools and act as appropriate to support the economy
  • Powell said "The debt is growing faster than the economy. This is not the time to act upon those concerns"
  • The Fed pledged accommodative policy until the economy again reaches full employment and 2% inflation.
 

What to Watch Out For This Week:

 


The above are the major economic reports that will hit the market this week. They each have the ability to affect the pricing of Mortgage Backed Securities and therefore, interest rates for Government and Conventional mortgages. I will be watching these reports closely for you and let you know if there are any big surprises.

It is virtually impossible for you to keep track of what is going on with the economy and other events that can impact the housing and mortgage markets.  Just leave it to me, I monitor the live trading of Mortgage Backed Securities which are the only thing government and conventional mortgage rates are based upon.

By Taff Weinstein at

She Sheds are Here!

What is a she shed?

A she shed is a female man cave (only better). It is a dedicated space in the home set aside just for the woman of the house. It can a place for recreation, rejuvenation and enjoying personal activities. Most of all it is a female sanctum dedicated entirely to the woman.

Our modern society has created a very fast paced existence that can be very demanding and that can quickly drain our energy reserves. This is a growing concern for many modern women.

Enter the she shed!

A she shed is by far the best way to recharge your batteries by giving you the personal space to engage in any activity that takes you away from your normal routine or by simply allowing you to chill for awhile.

What Happened to Rates Last Week?

Mortgage backed securities (FNMA 2.500 MBS) gained just +11 basis points (BPS) from last Friday's close which caused fixed mortgage rates to remain at the same levels as the prior week.

Overview:  Overall, the March economic data was very weak.  Normally, this would help lower mortgage rates but instead rates ticked up on the reduction of demand on the buy side of the trade as the Federal Reserve purchased fewer MBS than they had the prior week.

Domestic Flavor:

Manufacturing: The preliminary March headline Durable Goods Orders crashed to a reading of -14.4 vs est of -11.9. Ex Transportation, it was actually better than expected with a shrinkage of only -0.2 vs est of -5.8.

Consumer Sentiment: The final April University of Michigan's Consumer Sentiment Index was revised upward from the prelim reading of 71 to 71.8

Taking it to the House: March New Home Sales hit 627K vs est of 645K. Weekly Mortgage Applications were flat at -0..3%. Purchase Applications increased by 2.0% while Refinance Applications dropped by only -1.0%. The February FHFA Housing Price Index MOM change was 0.7% vs et of 0.3%. March Existing Home Sales hit 5.27M vs est of 5.3M.

Stimulation Nation: The House and Senate reached a deal for an additional $484 billion in coronavirus relief


What to Watch Out For This Week:

 


The above are the major economic reports that will hit the market this week. They each have the ability to affect the pricing of Mortgage Backed Securities and therefore, interest rates for Government and Conventional mortgages. I will be watching these reports closely for you and let you know if there are any big surprises.

It is virtually impossible for you to keep track of what is going on with the economy and other events that can impact the housing and mortgage markets.  Just leave it to me, I monitor the live trading of Mortgage Backed Securities which are the only thing government and conventional mortgage rates are based upon.

By Taff Weinstein at

Should you paint your brick?

What Happened to Rates Last Week?

Mortgage backed securities (FNMA 2.500 MBS) lost -58 basis points (BPS) from last Friday's close which caused fixed mortgage rates to move slightly  higher from the prior week.

Overview:  Overall, the March economic data was very weak.  Normally, this would help lower mortgage rates but instead rates ticked up on the reduction of demand on the buy side of the trade as the Federal Reserve purchased fewer MBS than they had the prior week.\

 

Domestic Flavor:

Economic Indicators: The March Leading Economic Indicators dropped by -6.7 vs est of -7.0, it is the worst reading ever on record.

Jobs, Jobs, Jobs: Initial Weekly Jobless Claims were higher than expected, coming in at 5.245M vs st of 5.105M. Continuing Claims jumped to 11.976M but that was actually less than market expectations of 13.50M. This means that 22 million jobs have been lost in just 4 weeks. That wiped out ALL of the job gains that our economy picked up after our last recession.

Taking it to the House: March Housing Starts were 1.216M vs est of 1.30M which is a sizable pullback from Feb's annual pace of 1.564M. Building Permits were inline with estimates, 1.353M vs est of 1.300M. Weekly Mortgage Applications increased by 7.3%, thanks to a pick up of 10% in Refinance Applications. Purchase Applications fell for the 5th straight week, down -2.0%. The April NAHB Housing Market Index dropped to 30 vs est of 55, it was hanging in the low 70's for awhile.

Manufacturing: The April Philly Fed Manufacturing Survey was dismal with a contraction of -56.6 vs est of -30. The April New York Fed Regional Manufacturing Survey for NY (Empire Manufacturing) tanked by -78.2 which was far worse than the projected pull back of -35.0. The March Industrial Production report was also dismal, down -5.4% vs est of -4.0%. Capacity Utilization was only 72.7% vs est of 73.8%


What to Watch Out For This Week:

 


The above are the major economic reports that will hit the market this week. They each have the ability to affect the pricing of Mortgage Backed Securities and therefore, interest rates for Government and Conventional mortgages. I will be watching these reports closely for you and let you know if there are any big surprises.

It is virtually impossible for you to keep track of what is going on with the economy and other events that can impact the housing and mortgage markets.  Just leave it to me, I monitor the live trading of Mortgage Backed Securities which are the only thing government and conventional mortgage rates are based upon.
 

By Taff Weinstein at

Why a Soffit and Fascia are Important

What Happened to Rates Last Week?

Mortgage backed securities (FNMA 2.500 MBS) gained +54 basis points (BPS) from last Friday's close which caused fixed mortgage rates to move slightly lower from the prior week.

Overview:  We had a holiday-shortened weekly session with an early close on Thursday and the bond market closed on Friday. Mortgage backed securities (the only thing that mortgage rates are based on) closed the week up.  We saw another large spike in unemployment filings and the Fed once again stepped in with another round of emergency action.

 

 

Domestic Flavor:

Jobs, Jobs, Jobs: The February Job Openings and Labor Turnover Survey (JOLTS) showed a very robust 6.882M unfilled jobs vs est of 6.600M. Initial Weekly Jobless Claims saw another surge, this time by 6.606M vs est of 5.250M. The 4 week moving average is now 4.265M

The Talking Fed: The Federal Reserve Bank of New York purchased $5.5B of FNMA 2.56 and 3.0 coupons at 9:50am and then again at 2:20pm
We also got the Minutes from the last FOMC meeting on Wednesday. In a separate measure, the Federal Reserve announced another round of emergency measures. This time with a big hammer. They will do up to 2.3 Trillion dollars. Here is some of what that entails:

 

  • The Main Street Lending Program will “ensure credit flows to small and mid-sized businesses with the purchase of up to $600 billion in loans." This means that the Paycheck Protection Program will likely be expanded by an additional $250BN to reach a total of $600BN.
  • A special-purpose vehicle that Fed created jointly with the Treasury Department will purchase 95% of the loan while the financing institution would hold the other 5%
  • Expanding the size and scope of the Primary and Secondary Market Corporate Credit Facilities and the Term Asset-Backed Securities Loan Facility to support as much as $850 billion in credit
  • The loans would be geared toward businesses with up to 10,000 employees and less than $2.5 billion in revenues for 2019. Principal and interest payments will be deferred for a year.
  • A Municipal Liquidity Facility which will offer as much as $500 billion in lending to states and municipalities, by directly purchasing that amount of short-term notes from states as well as large counties and cities
  • Starting the Paycheck Protection Program Liquidity Facility, “supplying liquidity to participating financial institutions through term financing backed by PPP loans to small businesses”


What to Watch Out For This Week:

 


The above are the major economic reports that will hit the market this week. They each have the ability to affect the pricing of Mortgage Backed Securities and therefore, interest rates for Government and Conventional mortgages. I will be watching these reports closely for you and let you know if there are any big surprises.

It is virtually impossible for you to keep track of what is going on with the economy and other events that can impact the housing and mortgage markets.  Just leave it to me, I monitor the live trading of Mortgage Backed Securities which are the only thing government and conventional mortgage rates are based upon.

By Taff Weinstein at

Setting up your home office

What Happened to Rates Last Week?

Mortgage backed securities (FNMA 2.500 MBS) lost -77 basis points (BPS) from last Friday's close which caused fixed mortgage rates to move slightly higher from the prior week but closed the week at the second lowest rates in history.

Overview:  Mortgage backed securities (the only thing that mortgage rates are based on) closed the week out at their second best Friday on record. Of course the prior Friday was the best level on record.  The pullback in MBS was mostly due to the Federal Reserve pulling back the amount of direct purchases of MBS that they were making by $10B.

 

 

Domestic Flavor:

Jobs, Jobs, Jobs:  It was Big Jobs Friday last week!  You can read the official Bureau of Labor and Statistics report here.
Tale of the Tape:
Jobs
Non Farm Payrolls (NFP) March -701K vs est of -100K
NFP February revised upward from 273K to 275K
NFP January revised downward from 273K to 214K
The rolling  three month average is now -71K
Wages
The national average hourly earnings rate rose by 11 cents to $28.62 per hour.
The MOM gain in Average Hourly Earnings is 0.4% vs est of 0.2%
The YOY gain in Average Hourly Earnings is 3.1% vs est of 3.1%
Unemployment
The Unemployment Rate increased to 4.4% vs est of 3.8-4.0%
The U6 Under Employment Rate increased to 8.7% vs est of 7.1%
The Participation Rate fell to 62.7% vs est of 63.3%

Services:  The March ISM Non Manufacturing Report (2/3 of our economy) was much stronger than expected, showing an expansion at 52.5 vs market expectations for a contraction of 44.0


Manufacturing:  The March national ISM Manufacturing PMI was much stronger than expected (49.1 vs est of 45.0) but still showed contraction with a reading below 50.  Prices Paid ( a measure of inflation) dropped to 37.4 vs est of 41.2. The March bell-weather Chicago PMI was much better than expected (47.8 vs est of 40.0) but still was in contraction territory with a sub-50 reading.

What to Watch Out For This Week:

 

 
The above are the major economic reports that will hit the market this week. They each have the ability to affect the pricing of Mortgage Backed Securities and therefore, interest rates for Government and Conventional mortgages. I will be watching these reports closely for you and let you know if there are any big surprises.

It is virtually impossible for you to keep track of what is going on with the economy and other events that can impact the housing and mortgage markets.  Just leave it to me, I monitor the live trading of Mortgage Backed Securities which are the only thing government and conventional mortgage rates are based upon.

By Taff Weinstein at

Housing Market Update

What Happened to Rates Last Week?

\

Mortgage backed securities (FNMA 2.500 MBS) gained +333 basis points (BPS) from last Friday's close which caused fixed mortgage rates to move downward to their lowest levels in history.

Overview:  Fed to the Rescue!  Mortgage rates dropped to their lowest levels on record as the Federal Reserve directly purchased massive amounts of mortgage backed securities, creating demand where there was essentially none.  Each trading session they purchased $50 billion dollars worth.

 

Domestic Flavor:

Inflation Nation:  The February Headline PCE YOY matched market expectations (1.8% vs est of 1.8%).  Core (ex food and energy) YOY increased 1.8% vs est of 1.7%.  Personal Income MOM 0.6% vs est of 0.4% and Personal Spending 0.2% vs est of 0.2% Consumer Sentiment:  The preliminary March reading was revised lower from 95.9 down to 89.1

Central Bank Palooza:  The Bank of Canada cut their key interest rate by 1/2 point and will purchase 500B each week which includes corporate debt.  The Bank of England kept its key interest rate at 0.1%.  They had previously cut that from 0.75% at an emergency meeting.  They took no action at this regularly scheduled meeting.  The European Central Bank started purchasing bonds under its new emergency QE facility and so far it is helping both Spanish and Italian bond yields.

Stimulus?  The House finally passed the $2T Bill that passed the Senate by a vote of 96-0. 

The Talking Fed:  The Federal Reserve Bank of New York purchased $50B of mortgage backed securities each day

By Taff Weinstein at

Tips on setting up your home gym

With nearly 1/3 of all American's told to stay home during the virus preventative measures and more than half of the country's gyms closed for the same reason, its time to look into getting your home gym going (finally). Here are some tips for setting up the perfect space:

Find a place that you can designate for workouts. It may be a spare bedroom, basement, garage, porch, or even just a corner of your living room. Make sure that it fits the equipment you will be using and that it is free from distractions that will try to pull you away from the task at hand. If it has a window – great! But, a door that closes is even better. Shutting off the outside world for a little while will help you stay focused on getting the best from your workout. If you have a separate room, you can paint the walls a happy color and hang motivational posters. However, not everyone  has this option – and that's alright! You don't need a huge area as long as it's large enough for you to perform the types of exercise you have chosen. After all, it's not very comfortable (or safe) to use a stationary bike that has been wedged between the bed and the dresser.
Light is very important. Darkness makes you sleepy, less motivated, and triggers your body to shut down. Natural light is best, but again, that isn't always possible. So, bring in some lamps or lights to make your space bright.

Make sure that the area is free of clutter. Use shelves, bins, or cupboards to store equipment so that the space is clear for working out. If your fitness room also doubles as your living room, bedroom, or dining room, then choose decorative furniture such as lidded ottomans, trunks, or cabinets.  If you can't install a full-length mirror, you may want to purchase a light, portable one. Making sure that you are performing movements correctly can improve results and decrease your risk of injury.

Set a Budget. Write down your goals and decide what equipment you will need to meet them. Determine what you able and/or willing to invest and what will work best in the space you have. Check out second hand shops, classified ads, or wait for sales. Doing a little homework can save a lot of money.

Choose Your Equipment. First, make sure the equipment you choose fits your space and gives you enough room to move around. If you have lots of space and want big machines, then go for it! But, remember, you don't need fancy equipment to get into shape. In fact, body weight exercises can deliver amazing results and you need nothing but....well...YOU. Let's be honest, many people buy expensive equipment and end up not using it. How many weight machines and treadmills have been transformed into clothes hangers and dust collectors? Simple things like resistance bands, dumbbells, kettle bells, stability balls, balance discs, and jump ropes can help you meet your goals without costing a lot of money or taking up a lot of space. And, you don't need everything all at once. Start with the basics – buy a few key items – and build up from there. Add a few new things whenever the funds become available or you find a great sale. It will also give you time to see what you really need – or will actually use – so you aren't wasting money on unnecessary equipment. 

Make A Plan And Stay Committed. A home fitness room is only effective if it's used, right? Whether you hang a chalkboard/whiteboard on the wall or use a notebook, having a plan will always help you get the most out of your workouts. Make your area appealing enough that you want to use it and then plan out each workout to help you meet your daily, monthly, and long-term fitness goals.

By Taff Weinstein at

NAR: Covid-19 Starting to Impact Home Showings, But Lower Rates Offset

NAR: Covid-19 Starting to Impact Home Showings, But Lower Rates Offset

Nearly one in four homesellers are changing how their home is viewed due to the COVID-19 outbreak, according to a new report from the National Association of Realtors. That percentage jumps to 44% and 34%, respectively, in Washington State and California, two of the states most severely affected by the outbreak.

The changes introduced by sellers include halting open houses, requiring potential buyers to wash their hands or use hand sanitizer, and asking buyers to remove shoes or wear footies, NAR reported.

NAR’s Economic Pulse Flash Survey asked members about how the outbreak – along with associated drops in stock market values and mortgage rates – has affected homebuyer and seller interest and behavior. Other key findings of the survey include:

  • 37% said lower mortgage rates excited homebuyers much more than the stock market drop
  • 78% said there had been no change in buyer interest due to the COVID-19 outbreak
  • 16% said buyer interest was down due to the outbreak.
  • Members in California and Washington State reported sharper decreases in buyer interest – 21% and 19%, respectively
  • 87% said that COVID-19 has not affected the number of homes on the market
  • In Washington State and California, 5% and 4% of members, respectively, reported that homes had been removed from the market. The figure is 3% nationally


What Happened to Rates Last Week?

Mortgage backed securities (FNMA 3.000 MBS) lost -149 basis points (BPS) from last Friday's close which caused fixed mortgage rates shoot higher compared to the prior week.

Overview:  Once again, it was all CoronaVirus, all the time as the global economic slowdown becomes more and more prevalent.  This forced a series of government and central bank action that was designed to stimulate the markets but actually had the opposite effect as the markets signaled it was too little in advance of a major global economic recession that is coming due to the virus.

Domestic Flavor:

Central Bank Palooza:  The Peoples Bank of China announced a targeted RRR cut of 50bp-100bp for banks qualified in "inclusive finance" tests, effective March 16, which will release liquidity of RMB 400bn. An additional 100bp cut will be granted for qualified joint-stock commercial banks, unleashing liquidity of RMB 150bn to the market.  The Bank of Canada announced an emergency 50 BPS rate cut plus a $10B support program. announced an emergency 50 BPS rate cut plus a $10B support program. The European Central Bank (ECB) kept their main interest rate at 0.0% and their deposit rate at -0.5% but announced more liquidity (asset purchases) to their schedule.  The Federal Reserve stepped in with emergency measures of $1.5T (that "T" is for trillion) “across a range of maturities” to include bills, notes, Treasury Inflation-Protected Securities and other instruments. The Bank of England has an emergency -50BPS rate cut, and slashed capital buffer requirements

Inflation Nation:  The February Headline Producer Price Index (PPI) YOY increased by 1.3% vs est of 1.8%. The Core PPI (ex food and energy) YOY increased by 1.4% vs est of 1.7%. (PPI) YOY increased by 1.3% vs est of 1.8%. The February Headline Consumer Price Index (CPI) YOY increased by 2.3% vs est of 2.2%. The Core CPI (ex food and energy) YOY increased by 2.4% vs est of 2.3% as Services inflation continues to accelerate to its highest since August 2016 as goods inflation languishes.

President Trump: Officially declared a National Emergency which activates approx $50B in funds available to FEMA and others and allows suspension of laws an regulations to move quickly for approving testing and treatment options.

What to Watch Out For This Week:


The above are the major economic reports that will hit the market this week. They each have the ability to affect the pricing of Mortgage Backed Securities and therefore, interest rates for Government and Conventional mortgages. I will be watching these reports closely for you and let you know if there are any big surprises.

It is virtually impossible for you to keep track of what is going on with the economy and other events that can impact the housing and mortgage markets.  Just leave it to me, I monitor the live trading of Mortgage Backed Securities which are the only thing government and conventional mortgage rates are based upon.

By Taff Weinstein at

By Taff Weinstein at

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