Good Wednesday AM on this best day of the week,

 

Stocks are fading a bit and Bonds are neutral to improving. ‘What is happening with the Stimulus?’ is on everyone’s mind. If no deal, stocks likely fade more. Mortgage Bonds are pushing toward a bullish bias (lower rates). They could run further now that they have broken above support. However, I do not trust this because we have seen too many false breaks to the upside. Combine this with the fact that treasuries are falling and the best advice is to be careful floating. Locking is a safer play. This mini-rally could continue, but this is the exception and not the rule.

 

Hammer Helmer, who I don’t quote often, did have some interesting points this a.m.:

 

Stimulus package latest updates:

Treasury Secretary Steven Mnuchin is back on the scene, making a surprise re-entry into talks with a $916 billion proposal. This plan is different than the bipartisan $908 billion plan, mainly in that it will provide $600 stimulus payments to individuals and cuts the supplemental unemployment aid to $300 a week. It also includes protections for employers from Covid related lawsuits, something Democrats have opposed but Senate Majority Leader Mitch McConnell has been adamant is a requirement. Anyway, not likely something will be agreed on today, but it remains likely something will get done in time to be packaged with the omnibus (that’s a great word, isn’t it?) spending bill (which was supposed to be done this week but won’t be). The House is voting today to kick the can down the road a bit for a government shutdown, passing a seven-day resolution, and the Senate will vote after. This will give another week for talks to continue. Markets have already priced in a deal, so we shouldn’t see any huge reaction when one gets announced… nothing that should cause rates to jump or anything like that, although we may see a day or two of worse pricing.

 

Covid updates (as they relate to mortgage pricing):

Case counts and hospitalizations are up, and death numbers are increasing as well. Lockdowns are getting worse, especially on the west coast, but markets remain optimistic that the vaccines rolling out now will help make 2021 a very profitable year for stocks. Although I was expecting a bigger effect from concerns about the economic recovery faltering would have helped pricing more by now (that was counter-acted by the stimulus), we’ve still seen pricing improve on most rate sheets over the last couple of weeks and I think we will see a bit more.

 

Loved this piece from the Mortgage Bankers Association:

 

Demand for million-dollar homes is growing faster than any other price tier in the pandemic-driven U.S. housing boom. In October, applications for mortgages larger than $766,000 jumped 59%, the biggest gain for all segments measured by the Mortgage Bankers Association. By comparison, the increase for mortgages from $150,000 to $300,000 was 13%.

 

The Rich Get Busy

Applications for the priciest segment of mortgages have surged the most:

And last, once more, where is the inventory? For those hanging on to hopes of price deflation to enter the market, prices were improving/increasing when inventory was 3-4x of where we are now. What will change in this market increase inventory? That is the first question to ask and answer.

Please remain safe and healthy, make today great!