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Mark Hemingway

Mortgage Market Update for September 14th

Monday, September 14, 2020 - Article by: Mark Hemingway - Security Financial Services, LLC - Message

Americans looking for loans to purchase or refinance a home saw a decrease in credit availability in August. The Mortgage Bankers Association reports that its Mortgage Credit Availability Index fell by 4.7% to 120.9. A decline in the MCAI indicates that lending standards are tightening, while increases in the index are indicative of loosening credit. "Mortgage credit supply fell to its lowest level since March 2014, driven by a reduction in supply from both conventional and government segments of the market," said Joel Kan, MBA's Associate Vice President of Economic and Industry Forecasting.

Mortgage forbearances continue to decline across the country as Americans get back to work. Black Knight reports that last week, there were 3.7 million homeowners in forbearance, down 22% from the 4.7 million seen in May. For forbearance rates backed by Fannie Mae and Freddie Mac fell marginally to 5% from 5.1%. As the economy continues to reopen, the economy should start to bounce back. Gross Domestic Product for Q3 2020 is expected to rise by 25%, which would be a record after the record decline of 31% in Q2 2020 due to the pandemic induced shutdown.

Federal Reserve members kick off the two-day Fed meeting on Tuesday and ends Wednesday at 2:00 p.m. ET with the release of the monetary policy statement. There is a zero-percent chance of a hike to the short-term Fed Funds Rate which is currently at .125%. Will the Fed discuss the recent inflation measures? How long will QE4 continue? The monetary policy statement will be accompanied by a set of economic projections with Fed Chair Powell's news conference at 2:30.

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