It finally happened. This week Freddie Mac reported a 30-year fixed-rate mortgage average below 3%. That puts the average for consumers (remember, your rate will vary based on a variety of conditions) at 2.98%. As you would expect, mortgage volume has gone up over the last week. The Mortgage Bankers Association's data shows total mortgage application volume went up 5.1% week-over-week, with refinances seeing a 12% jump. According to the MBA, refinances are up 107% annually. 

The MBA's report showed that weekly purchase applications were down. However, recent purchase activity spurred Fannie Mae to revise up its forecast for Q2 existing home sales to 4.3 million annualized units from 4.1 million. The group also increased its forecast for Q3 sales to 5.4 million annualized units from 4.9 million.

“We had expected a rebound in purchase activity to occur in May and June as shutdown measures began to be relaxed, but the magnitude to date has been remarkably strong. It is likely that many homebuyers who would have purchased a home in March or April have instead done so in more recent months,” the group noted. “Additionally, some purchases may have been pulled forward due to low mortgage rates and continued social distancing measures leading to some households reassessing their current living arrangements.”

It should be noted that we will continue to see fallout in the housing industry caused by the pandemic. CoreLogic's latest report on delinquencies shows that in April of this year, Americans had a 6.1% mortgage delinquency rate. That's the highest it's been since 2016. In March of this year, we had just hit record lows for forbearance and were in the middle of a 4-year decline in delinquencies. 

President and CEO of CoreLogic, Frank Martell, summed up the report, saying, “As the true impact of the economic shutdown during the second quarter of 2020 becomes clearer, we can expect to see a rise in delinquencies in the next 12-18 months – especially as forbearance periods under the CARES Act come to a close.”

Notable Market News

• This is the 16th straight week of initial unemployment claims over 1 million.
• Continuing claims totaled 17.33 million for the week of July 4. These are jobless claims for at least two weeks straight. 
• As coronavirus cases rise, Treasury yields are falling. Friday morning's 10-year Treasury note was trading down at 0.6037%.
• Retail sales jumped by 7.5%, according to the Commerce Department. 
• Consumer price index (prices consumers pay for goods) increased for the first time in three months, hitting 0.6%. When you take out volatile readings like food and energy, you see a monthly increase of 0.2%.
• The Treasury Department reports a new monthly budget deficit record for the U.S. at $864 billion. 
• TheU.S. is projected to hit a deficit of $3.7 trillion for the year. 
• Dallas Federal Reserve President Robert Kaplan predicts a 4.5-5% contraction in the economy this year. However, he thinks 2021 will see above-trend growth as long as we continue to manage the COVID-19 pandemic.