Friday morning's Dow futures sank more than 200 points as investors continue to await a decision in Washington D.C. The House of Representatives adjourned on Thursday after passing a spending plan to keep the federal government open for another week as Republicans and Democrats try to figure out a second pandemic-related stimulus package.

Increased unemployment benefits are set to run out at the end of the year without a new stimulus package. This week, the Labor Department reported 853,000 initial unemployment claims with continuing claims increasing by 230,000.

The bond market had been steadily increasing this week with the benchmark 10-year note yield flirting with breaking the 1.0% mark yet again. However, stalling on Capitol Hill pushed yields back down below 0.9% with the 10-year yield trading at 0.893% early Friday morning.

Typically, the 10-year note yield is reflective of activity in mortgage rates. If the yield moves higher, that normally corresponds to an uptick in interest rates. That hasn't been the case lately. This week's 30-year fixed-rate mortgage average came in, once again, at 2.71%. This week, we saw Treasury note yields ticking upward which, under normal circumstances, would mean that interest rates would follow suit.

The difference between the 10-year note yield and mortgage interest rates is known as the mortgage spread. Freddie Mac's Chief Economist Sam Khater noted in this week's report that, “Although today's mortgage spread is about 1.8 percentage points and still has some room to move down if the 10-year Treasury continues to rise, it's encouraging to see that the spread is almost back to normal levels.” 

The low rates have continued to spur demand in both purchases and refinances, with refinance activity stil up 89% year-over-year according to the Mortgage Bankers Association. The other factor in refinances is a distinct increase in available home equity.

One of the downsides of this current market is the problem of supply and demand. There just aren't that many homes available to buy, but that hasn't stopped consumers. The increased demand with a sharp decrease in supply has put incredible pressure on home prices. As prices have skyrocketed, but so has equity.CoreLogic's recent report shows homeowners with mortgages have seen their equity increase by 10.8%. In the report, CoreLogic's chief economist Frank Nothaft said the increase in equity is extremely important during uncertain financial times. "The average family with a home mortgage loan had $194,000 in home equity in the third quarter. This provides an important buffer to protect families if they experience financial difficulties." Overall, CoreLogic says there has been a total of $1 trillion in gained equity this year.