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Mortgage Rate Update 11/2/2020

Hello everybody. Sean Zalmanoff here with your mortgage rate update this week.

Big news happening this week. This one thing that consistently happens every four years. We get to elect our next president of the United States, and that is potentially a market-moving, a big market-moving, an interest rate, moving announcement in most environments. Except this one, the macroeconomic factors that we are facing today with unemployment levels being elevated with COVID at record numbers of cases. I’m watching the stimulus package that still isn’t on the way. Remember it won’t be here this week either because Congress is on vacation because they have more important things to do, than help us out until at least November 9th. And then depending on what happens with the election, we may see a stimulus bill shortly after that, or it could be all the way until the early part of next year before that happens.

Although we need a stimulus of some sorts and I’m hoping that happens sooner than later, if we don’t get one, probably means stocks are going to sell-off. And that the bond rates, the bond market’s going to get better and rates will improve some. Speaking of improvement, we expect to see an improvement this Friday in the unemployment numbers. On Friday of this week, the first Friday of every month, the Bureau of Labor Statistics releases the new numbers. We are expected to see a 0.3% decrease going from 7.9% to 7.6% in unemployment. You have got to take these numbers with a grain of salt. You really need to look at the jobs created. The expectation is for 600,000 new jobs to be created in our market, but you could see the unemployment rate move in a different direction, depending on the factor that I track the most. That factor is the labor participation rate. In order to be included in the unemployment numbers, you have to have been looking for a job in the last month. So, if people stop looking for a job, they get disenfranchised with the market. Unemployment can actually go down without unemployment really going down.

We also have another big meeting this week. The Fed meets Wednesday. The Fed’s meeting this week and although they have talked about keeping short-term interest rates low till the end of at least 2021, there is the potential always for inflation to kick in. When the Fed keeps short-term interest rates low, those do not affect mortgage-backed securities, the bonds that we use to purchase in order to get people rates these days. Depending on the size of the stimulus that kicks in and when it kicks in, what happens in inflation, those are all things that move the market.

Hey, let’s talk about this market because I want to show you where mortgage-backed securities are trading, how they’ve been trading and what you should really be thinking about right now, as you’re considering refinancing or purchasing your new home. This is going to show you, don’t pay attention to the S&P, although it is interesting today to note that the stock markets are up big and interest rates are actually improving some. You see green going up and you probably think to yourself, well, the stock market going up, prices are higher. How does that correlate? The bond market will, yes, prices are higher in the bond market too. The higher the prices in the bond market, the less expensive rates are, which means the better mortgage rates are for you.

As you can see over here, each of these little things is a Japanese candlestick. We’ve talked about the history of those in the past, but in general, green is good. You’re up 16 basis points and it’s green that will naturally happen anytime, it’s green. You can see the last 90 days, rates have been pretty darn stable. If you’ve been thinking about refinancing, “Hey, are rates are going to get better or are rates going to get worse?” They haven’t gotten substantially better. You should probably think about locking in soon as the perpetual broken records, of rates are the best they’ve ever been.

Just to give you a little longer timeframe, we’re going to go out for the entire year. You’re going to see, January 3rd, starting right here, and then this was when the pandemic really gripped the United States. We had moves in the bond market that I’ve never seen in my 20-year career. Then it started to flatten out and rates got a little bit better, but as you can see, as we move on down the line, they have been pretty stable. What that means to you, is that it’s a great time to lock in, whether you’re looking at purchasing, whether you’re looking at refinancing, now is a really good time to take advantage of these interest rates. If you need some amazing mortgage advisors, reach out to us, my team is here to help. We just want to help. We want to be of service to you, and we want to make sure that your mortgage needs get taken care of. Give us a holler. We appreciate you. Have an awesome day, y’all. Bye.

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