November 9, 2020
The U.S. presidential election consumed most of our attention last week and over the weekend as votes were tallied. The results proved to be the catalyst for a dip in mortgage rates as uncertainty began to clear up. But Monday morning news broke of a potentially successful COVID vaccine, pushing rates to pre-election levels. What’s up next for Orion’s brokers and your clients?
Although at this point the election is done and the votes are counted, all signs point to legal action in several states about the voting accuracy and process by the Trump Administration. As of this writing, however, Joe Biden is considered the President Elect. The pollsters were wrong again, and there was no “blue wave” that would have potentially led to a large new stimulus package to combat the economic effects of the coronavirus pandemic. This news, while not good for the economy, kept mortgage rates low for your clients.
On the flip side, economic data released over the last week showed an economy that continues to improve in some areas and stagnate in others. Jobs and housing drive the U.S. economy. Residential real estate continues to benefit as shifting preferences for more space boosted residential construction spending in September. Meanwhile the service sector continues to struggle and increasing coronavirus cases makes it more difficult for close-contact services to see a similar recovery to manufacturing.
Additionally, the news of a potential vaccine this morning pushed mortgage rates higher. The potential of a strengthening economy, despite being many months in the future, could lead to higher rates. But vaccine production and distribution are a long way off. In the here and now, the uncertainty around the pandemic has led to an increase in COVID-19-related goods spending. Despite the economic headwinds, last week we learned that over 600,000 new jobs were added in October and that number is even more impressive as 906,000 private sector jobs were added.
As noted above, Orion’s brokers know that our economy is driven by jobs and housing, both of which are doing well. A legitimate vaccine will help consumer’s mindsets but the improving economy could nudge rates higher. Through it all, brokers are ideally situated to be nimble and help your client’s with their refinancing or home purchase!