Why a Soffit and Fascia are Important

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.

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