Mortgage lenders should rejoice at the continuing low level of 30-year mortgage rates and the 10-year Treasury yield.
The Covid-crisis can be seen in the following chart, starting in January 2020. It has been all downhill since January 1st in terms of rates and yields. With the exception of the blip in the Freddie Mac US Mortgage Market Survey 30 Year Homeowner Commitment rate around March 19, 30-year mortgage rates are barely above 3%.
The US Ultra Bonds futures price continues to trade at an ultra-premium.
The ultra premiums in ultra bond futures indicates that the Covid shutdowns are likely to return. Or continue to ravage the economy. And endless interference in markets by The Federal Reserve.
US 1-unit housing starts declined 17.8% YoY in May, another indicator of the damage done by the economic shutdown due to the Covid-19 epidemic.
1-unit housing starts YoY are back to 2006 levels where the ALT-A / subprime virus struck with far more damage.
Notice that The Federal Reserve didn’t react with rate cuts until Q4 2007 that continued through 2008. Notice that the US is back to 25 basis points again, but with 7.09 TRILLION on their balance sheet … and all we get is -17.8% YoY decline.
Meanwhile, mortgage purchase applications have rebounded nicely.
MBA purchase applications have rebounded nicely despite the government shutdown. But in spite of the historic (or hysteric) monetary stimulus from The Federal Reserve, the US in no where the housing bubble years.
Time for more snake juice?
Here is a video of Fed Chair Jerome Powell trying to cope with the blowback from Covid-19.
According to the Mortgage Bankers Association, the Refinance Index decreased 0.2 percent from the previous week and was 176 percent higher than the same week one year ago. The seasonally adjusted Purchase Index increased 9 percent from one week earlier. The unadjusted Purchase Index increased 7 percent compared with the previous week and was 9 percent higher than the same week one year ago.
Mortgage refinancing applications declined slightly by -.23% despite near historic low mortgage rates.