Mortgage rates hit fresh record lows in the latest week and continue to buoy the housing sector. The MBA reports that the 30-year fixed-rate mortgage fell from 2.90% to 2.85% with 0.33 in points in the week ending December 11, 2020. The MBA went on to report that the Market Composite Index rose 1.1%, the Purchase Index increased by 1.8% while the Refinance Index gained 1.4%. "The ongoing strength in the housing market has carried into December. Government purchase applications rose for the sixth straight week to the highest level since June - perhaps a sign that more first-time buyers are entering the market."
The exodus from urban to more suburban areas along with low mortgage rates continues to buoy the housing markets. The NAHB Housing Market Index came in at the second-highest reading ever at 86 this month and just below the all-time high of 90 hit in November. “Builder confidence fell back from historic levels in December, as housing remains a bright spot for a recovering economy,” said NAHB Chief Economist Robert Dietz.
It's Fed Day! The Fed will release its monetary policy statement at 2:00 p.m. ET today with Fed Chair Powell's press conference at 2:30. There is no chance of a change to the Fed Funds Rate, currently at .125%, and we don't see any rhetoric that would cause a big market-moving event. Investors will be looking for what the Fed has to say about 2021. The Fed Funds Rate is the rate in which banks lend their excess reserves overnight to each other.