December 22, 2020 | Market Update

Market News 12-25-2020

Mortgage Market Update

Mortgage Rates Remain Surprisingly Steady

Mortgage-backed securities (MBS) influence mortgage rates. Normally, when the MBS market moves as it did last week, rates increase noticeably. Rates, though, continued to operate very close to all-time lows. Why? Rate movements also are tied to lenders’ ability to fund loans promptly. Lenders raise rates to pump the breaks on lending and decrease rates to draw in new borrowers. Rates held at lows last week because many lenders still had an appetite to make more mortgages. Check with your loan officer next week; there may still be time to take advantage of historically low rates before yearend.1

Mortgage Demand Spikes

The mortgage industry will likely have its strongest year in originations since 2003. Mortgage applications to purchase a home jumped 9% week-over-week in early December and were 28% higher annually, according to the Mortgage Bankers Association (MBA). The amount of loans is also on the rise. The average purchase loan amount recently hit $375,000, a record since the inception of MBA’s survey in 1990. Today’s historically low mortgage rates are motivating buyers to enter the market with a little more purchasing power; sellers are responding by increasing prices.2

Update Insurance After a Remodel

If you made major remodeling upgrades recently, consider updating your insurance to cover increases to your home’s value. For a $15,000 bathroom renovation, expect an average premium increase of $54 annually. The annual premium increase for a $48,000 kitchen upgrade could run about $180. A $10,000 deck could be about $36. An insurance agent can advise you on coverage that protects your home’s new features should disaster strike.4

Sources: 1Mortgage News Daily, 2CNBC, 4Realtor Magazine