Market News 3-6-2020
Mortgage Market Update
Panic surrounding spread of the coronavirus and the global economic fallout have stocks plummeting. Investors seeking safe havens have turned to bonds, improving mortgage rates. The 10yr Treasury yield has reached record lows, falling below 1.0% for the first time in history. Markets are now extremely volatile, whipsawing between huge losses and gains. The Fed made an emergency policy rate cut of 0.5% this week. This cut to the Fed funds rate does not bring mortgage rates lower but is supposed to stimulate the economy.
Construction spending rose 1.8% in January, the biggest monthly gain in 2 years. Spending on home construction climbed 2.1%, reflecting the largest increase since August. Mortgage applications rose 15.1% from a week earlier. As a result of historically low rates, refinance applications were up an astounding 224% from a year ago. Home buyers are having a tough time finding a home they want, and it will likely get worse. Freddie Mac puts the housing shortage at a 3.3-million-unit deficit nationwide.