Morgage Market Review for March 27, 2020

In This Issue   Last Week in Review: Liquidity Defined Forecast for the Week: Bracing for Bad Data View: Tips for Working With First-Time Homebuyers   Last Week in Review   This past week, thanks to the Federal Reserve, home loan rates declined. The high uncertainty around the coronavirus and its impact on homeowners and mortgage payments created a dire need for liquidity in the mortgage-backed security (MBS) market. This is where the Fed came to the rescue by providing liquidity. What is liquidity? Liquidity describes the degree to which an asset or security can be quickly bought or sold in the market at a price reflecting its intrinsic value. In other words, it's the ease of converting it to cash. Last Sunday, the Fed announced that it would purchase an unlimited amount of MBS in order to provide the much-needed liquidity to get the MBS market to perform correctly. As a result, MBS prices showed more normal trading activity which resulted in lower rates and more stable pricing this week. We expect more stabilization in the days and weeks to come as the Fed is committed to getting the MBS market to function as normal. Bottom line: the Fed's unlimited MBS buying doesn't mean home loan rates are going to improve much further, but it will rather stabilize the market and keep rates near current levels, affording homeowners the ability to refinance and secure a low home loan rate. If you or someone you know has questions about home loans, give me a call. I'd be happy to help.   Forecast for the Week   Expect the recent extreme volatility to likely continue this week, but probably to a lesser extent with the Fed stepping in to stabilize the U.S. financial markets. In addition, the massive stimulus bill enacted by Congress may help to soothe the nerves of many Americans who were hurt both physically and financially from the coronavirus. Economic reports may not be market movers this coming week as everyone is expecting negative readings everywhere, especially in the labor market. Weekly initial jobless claims, ADP Private Payrolls for March, and the closely watched Jobs Report for March will reveal the initial economic impact of the coronavirus. The two questions that will be front and center for mortgage professionals in the upcoming week, addressed in the above "Week in Review," will be: has the mortgage market stabilized, and what is the path for rates for the foreseeable future? Chart: Fannie Mae 2.5% Mortgage Bond (Friday March 27, 2020)   The Mortgage Market Guide View...   Tips for Working With First-Time Homebuyers Today, many millennials are ready to start looking for a place to call their own. It's a thrill to help these individuals realize the dream of owning a home, but there are a few challenges that may come up along the way. The process of purchasing a home is second nature to real estate professionals, but it's important to remember just how foreign and overwhelming it can be to someone who's buying for the very first time. Spend more time talking about all the different steps of the process before going out to look at homes. Provide helpful guides that summarize each part of the homebuying process if possible. Some homebuyers get caught up in the excitement of looking at homes and neglect to think about the long-term responsibilities of owning property. Help your clients connect with a loan officer to determine a budget they can afford and help them stick to it. Advise them about the unexpected costs of homeownership that go beyond the monthly mortgage payments. Financing is a major concern for many first-time home buyers. They may not have major assets to bring to the table, and a smaller down payment is likely. Assist your clients in finding the best financing options for their needs. Work with an experienced loan officer to ensure they're aware of local, statewide, and national programs for first-time buyers. While there is more handholding involved, working with first-time homebuyers can be incredibly rewarding. Use these tips to help your clients find their dream home while staying within their budget. Sources: Inman, Real Estate Express Economic Calendar for the Week of Mar 30 - Apr 03   Date ET Economic Report For Estimate Actual Prior Impact Mon. Mar 30 10:00 Pending Home Sales Feb -1.3% 5.2% Moderate Tue. Mar 31 10:00 Consumer Confidence Mar NA 130.7 Moderate Wed. Apr 01 08:15 ADP National Employment Report Mar -150K 183K HIGH Wed. Apr 01 09:45 Chicago PMI Mar 40.0 49.0 Moderate Thu. Apr 02 10:00 ISM Index Mar 44.3 50.1 HIGH Thu. Apr 02 08:30 Jobless Claims (Initial) 3/28 3.0M 3.283M Moderate Fri. Apr 03 08:30 Average Work Week Mar 34.1 34.4 HIGH Fri. Apr 03 08:30 Non-farm Payrolls Mar -123K 273K HIGH Fri. Apr 03 08:30 Hourly Earnings Mar 0.2% 0.3% HIGH Fri. Apr 03 08:30 Unemployment Rate Mar 4% 3.5% HIGH