Cheap Fuel, Rate Volatility, 20 Year Low Delinquency levels.

Gasoline – people staying home & the price war between Saudi Arabia and Russia has lowered the demand for fuel (I didn’t even wait in line at Costco this week!). Prices have dropped to a national average of $2.30. At one pump in Virginia prices are $1.81 per gallon. Savings are a moot point if you aren’t commuting to work or traveling.

Rates – this week will be remembered as one of the most volatile weeks in mortgage history! Both the 10 Year US Treasury yield and mortgage rates hit mortgage lows Monday. Due to unprecedented refinance volume most banks and lenders raised prices nearly 1% overnight. Retail lenders were locking such high volume they faced ‘margin calls‘ from investors (concerned they didn’t have the liquidity to support their hedge) and were forced to sell off mortgage backed securities and raise rates to stay profitable. Some simply suspended locks. Expect continued volatility as the Fed injects liquidity into the market (to help banks have quick access to cash) and the coronavirus pandemic spreads.

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Loan Performance – mortgage delinquencies hit 20 year lows during the month of December. If the Coronavirus pandemic keeps people home/out of work for a prolonged period we could see changes in this report a few months from now.

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Jobs – the number of people filing for unemployment for the first time remains low. I’ll keep an eye on this to see if things spike in the following weeks.

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