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Mortgage Rate Update 1/25/21

Hello, everybody. Happy Monday. Sean Zalmanoff here with this week’s mortgage rate update. Hey, so we have news in the markets as we do every week. I’m going to show you some mortgage-backed security charts to show you we are back on our way up, which means rates are marginally moving down again. I just gave you this, so you know what to expect. Overall, you have to understand rates are great. Rates are going to continue to be pretty strong for a while, but I’m going to tell you what could affect it in the coming weeks here and this week too.

We’ve got the first full week of Joe Biden’s administration underway, lots of things happening. The first 100 days of the presidency is always what they judge by, what gets accomplished in the first a 100 days. As you all know, probably the main thing out is a 100 million people vaccinated in the first 100 days. We can start to get our lives back to normal is what the big push is for. But in the mortgage world, what’s going to affect rates right now and especially with the new administration.

There was talk and a proposal right at the beginning of a $1.9 trillion stimulus after I believe it was just the 900 billion that’s passed. Will there be more stimulus? Won’t there be more stimulus? There’s definitely going to be more stimulus. It just depends on what the actual price tag of that is. There’s a lot of bipartisan support to get the $600 payments that were sent to individuals up to 2000. And so, that we’ll go through at some point in the next few weeks, few months, it’s the government. It depends on how quick they move, but then what else is on top of that? Is it infrastructure? Is it student loan relief? These are all things that we don’t know yet but are market movers.

The thing to pay attention to is the bigger the amount of stimulus that gets passed, the worst that it probably is for rates. I’m not saying it’s bad for the economy, but the worst that it probably is for rates because the more stimulus, the more potential for inflation. As you know from listening to me, inflation is the arch enemy of bonds, which will make yields and rates rise. Let me show you, what’s quickly just gone on in the last week here. All right. Here is what we love to share, so you can see what’s going on in our markets. Remember green is good, red is bad when it comes to rates on mortgages.

As we move up the ladder here, rates get better and bond prices get worse. You saw right at the beginning of the year, we had the big sell off in mortgage-backed securities. Another thing to remember, rates always down or they always move up quicker than they move down, and you can see it. We lost about three eights of a point in a few days and we gained about half of that back or so since then, but we continue to move up here. We’re sitting right on this black line that you see coming through here, which I have tracked in my graph as the 50-day moving average. And we are sitting right below that.

If we break above and close above that, a rule that we talk about in the financial world is yesterday’s resistance becomes today’s support. It also works the other way. If you close below something yesterday, support comes becomes today’s resistance. You see if we do close above this mark, we have, Oh, another 50 or so basis points to run, which would be a positive impact on rates and roughly an eighth or a quarter point better than you even see them today is what you could be seeing in the market.

Interesting open to the market. The S&P’s up, now the NASDAQ’s up a fair amount and the Dow Industrials are down. That is what’s going on in your world today. And so, that’s all we got for you. Hey, if you are buying home, if you’re refinancing home, if you know somebody who is, we would love to help them and take care of them so please send them our way. I’m Sean Zalmanoff. Appreciate, y’all. Have a great day.

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