MARKET CHECK June 27, 2020
Home Loan Rates Hover at Historic Lows, Great News and Incredible Opportunity for Existing and Future Homeowners.
Will rates continue to hover at records low or is this the bottom? Stocks had a rough week. What's next ?
There are 3 things to track as we move through summer:
Several States have had Spikes in Coronavirus cases: This concern comes with both a human and economic toll. We are in a watch and pray mentality that hospitalizations don't increase significantly. From an economic standpoint, this could bring negative effect. At the very least, it delays state re-openings and continues the "incremental" improvement in the economy. Case in point is the Governor of Louisiana just this last week announcing the state will stay in lock down, Phase 2 for another 2 weeks. This puts a hurt on business that were just beginning to open again,Should cases rise significantly and cause even more chaos, Stocks may decline, thereby helping Bonds and rates.
Federal Response Overwhelming: The Fed, Treasury, and administration are spending trillions of dollars to help underwrite the economic recovery, and many trillions more will be spent. However one may ask at what cost to us in the days ahead. There are rumors that another PPP (Paycheck Protection Program) plan will come together before Congress recesses in August, yet it is also rumoured that it will do little to help those over 65 years of age or small business. There is also a $1 trillion dollar infrastructure bill being debated. In addition, the Fed will continue to purchase mortgage-backed and Treasury securities in the open market, and will hold rates near zero for as far as the eye-can-see. One needs to remember to have mortgages, folks need jobs and that means companies and people need to work. Stimulus helps both Stocks and Bonds, but Stocks even more, as the overwhelming support takes a bit of risk out of the markets ... hence the term, "Don't fight the Fed."
Keep an Eye on the Technicals: For all rates – including home loan rates – to improve much further, the 10-year yield has to move beneath .60%. This is something that has only happened a couple of times during the darkest moments of COVID-19. For Stocks, the S&P 500 is trying to remain above its 200-day moving average, currently at 3,020, an important technical marker. If Stocks regain some of this week's losses, it could be at the expense of Bonds and rates. Should the S&P 500 move sharply beneath its 200-day moving average, we will likely see an extended selloff, thereby helping Bond prices.
Bottom line: Rates are at all-time lows, and NOW is a Wonderful time to lock in a mortgage. One doesn't have a crystal ball to know what the future will bring, but we do know the policy response will continue to grow which generally helps Stocks and limits Bond/rate gains. And thats is a Good thing for folks looking to buy and sell a house. IF you have been thinking of Selling NOW is the time to do it. If your looking to Buy a house, NOW is a Good time to find it and buy it.
If You or someone you know has questions about Selling or Buying a home give me a call. I'd be happy to help. Sheri' Griffin 318-488-1760