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The big movers in the stock market this week were, as always, the trade war between the United States and China, Federal Reserve Chairman Jerome Powell addressing Congress and America’s incredible adoption rate of Disney+.

Who knew a love of Disney could affect your mortgage rates?

The yield on the 10-year Treasury note did walk back from the near 2% high last week to 1.819% at the start of trading Friday morning. A lot of that had to do with some back and forth between the United States and China on if tariffs would be rolled back to help ensure a “phase one” deal to end the 16-month long trade war. 

The deal has also hit a snag with regard to agricultural purchases. President Trump previously announced that China had agreed in principle to purchase up to $50 billion in products like soybeans and pork, but Chinese officials are reportedly wary of putting a firm number to that commitment on paper. 

Fed Chairman Powell emphasized a “new normal” for the U.S. economy during his remarks to Congress on Wednesday. “I think the new normal is lower interest rates, lower inflation, probably lower growth, and you’re seeing that all over the world, not just in the United States,” said Powell. 

Government data from the Labor Department released this week shows that the consumer price index (CPI), and producer price index (PPI), both showed increases which indicate rising inflation. However, it will likely take months of regular inflation increases to reach the Fed’s 2% benchmark. 

The higher interest rates did not deter buyers this last week, according to the Mortgage Bankers Association. Mortgage application volume went up by 9.6% week-over-week according to the MBA survey.

Joel Kan is the vice president of economic and industry forecasting for the MBA. He said, “Positive data on consumer sentiment, and growing optimism surrounding the U.S. and China trade dispute, were behind last week’s rise in the 30-year fixed mortgage rate.” Kan continued, “With rates still in the 4% range, we continue to expect to see moderate growth in refinance activity in the final weeks of 2020.”

Refinances are particularly sensitive to any rate moves but that volume also increased week-over-week by 13%. Year-over-year, refis are up 188%. 

Freddie Mac’s weekly mortgage rate average shows that a 30-year fixed-rate is right around 3.75%. That is up from last week reflecting positive consumer sentiment and less worry of a recession. Remember, a personal mortgage rate depends on a lot of factors including, but not limited to, type of loan, credit score, and down payment. 

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Movement Staff

The Market Update is a weekly commentary compiled by a group of Movement Mortgage capital markets analysts with decades of combined expertise in the financial field. Movement's staff helps take complicated economic topics and turn them into a useful, easy to understand analysis to help you make the best decisions for your financial future.