David Stevens answers 5 questions about the state of the mortgage market

At the beginning of 2020, low-interest rates and strong job growth contributed to a steady climb in consumer-purchasing power, which led to an uptick in both refinance and purchase demand.

But as the COVID-19 pandemic rapidly spread in March, many of the nation’s consumers were either forced to work remotely or not at all, as the incredibly infectious disease forced countless businesses to close their doors.

This, in turn, put pressure on U.S. markets as the Department of Labor reported nearly 3.3 million people filed for unemployment the week ending March 21.

In an effort to stabilize the economy, the Federal Reserve announced a pledge on Monday to purchase unlimited amounts of Treasuries and mortgage bonds, which they believe will grease the wheels of the credit markets.

The purchases also attempt to avoid the type of credit crunch seen after the collapse of the financial system in 2008 and could result in new lows for home-loan rates.

But will these rate declines benefit the
housing market?

In an exclusive video interview, HousingWire spoke to Mountain Lake Consulting’s CEO David Stevens about the economy’s recent turbulence and what the Fed’s decision means for the mortgage industry.

Stevens, who is the former president and CEO of the Mortgage Bankers Association and an industry titan who currently serves several advisory boards, explains why bond-buying may or may not be good for the market.

This interview has been lightly edited for length and

Q: This week, the Fed announced the unlimited purchase of
MBS and treasuries, adding multifamily. How do you think this will impact the housing
market overall?

A: That was a critical move, as anybody in the mortgage industry knows rates increased the week prior, and that was due to what we call an imbalance in the supply of mortgage-backed securities in the marketplace.

This was caused by two things: one was the origination pipelines were very full and then secondly, a lot of holders of mortgage-backed securities, were unloading them based on concerns about prepayment speeds.

It was not only causing rates to rise but it was also putting some institutions at risk for margin calls. This could have had a really negative impact on the economy.

So, the pressure was put on the Fed starting late last week, and people were working all through the weekend trying to get an announcement. While we were actually hoping for an announcement Sunday evening, it came Monday morning and it was a critical announcement that they would step in and create what’s called a short in capital market standards, and that has helped bring rates down.

I think as everybody knows, mortgage-backed security pricing really rallied over the last day or so. And while other issues are affecting interest rates, it’s having a really good impact so far.

Q: We know bond-buying is aimed at providing liquidity
and pushing rates lower. Do you think this has the likeliness to bolster the economy?

Well, the variables we’re facing right now are entirely different. Two weeks ago, we were barely talking about the coronavirus, and now, the whole world has changed. So, there’s a lot of things affecting rates.

It’s not just the value of mortgage-backed securities, it’s servicing values and servicing values have worsened fairly significantly.

What we don’t know is the details of the $2 trillion legislative package that has just been announced and hasn’t even been drafted yet. At this point, It’s just the terms on an agreement.

As of today, these things are all going to have an impact on the supply of treasuries in the marketplace, because they’re going to have to raise money to pay for this legislation.

So, on one hand, the bond-buying should drive rates lower under in a traditional sense, but what we don’t know is what the overall supply of debt is going to be and what it ultimately means for interest rates.

Read the rest of the Q&A and watch the full video interview with Stevens below.

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Are appraisals an essential service?

With the number of states, counties and cities issuing stay-at-home orders increasing every day, the real estate industry is left to quickly interpret whether its functions are considered essential services.

With many moving parts and jobs in the real estate process, appraisers, notaries and homebuilders, along with many other roles, are having to individually interpret their local restrictions to see how they can continue operating. 

The appraisal industry is one of those fields in a tight spot since not only is the majority of an appraiser’s work conducted in person, but they’re experiencing a surge in demand. Their job forces them to enter client homes when social distancing rules are stricter than ever, creating mounting concern as the virus continues to spread throughout the nation.

According to the Appraisal Institute, a global professional association of real estate appraisers, appraisers need to be considered an essential service nationwide. At least 17 states, 26 counties and 10 cities have issued stay-at-home type orders, with more joining the list every day, but of these orders, the Appraisal Institute found that only a handful of states and localities have explicitly cited real estate appraisers under essential worker classifications. Meanwhile, others are not being as specific, causing inconsistency and confusion for appraisers. 

The Appraisal Institute compiled a list of statewide stay-at-home, shelter-in-place or non-essential business closure orders, noting when possible if the order explicitly states appraisers as an essential service.

As more localities implement similar orders, the Appraisal Institute is working with governments to include appraisers as part of essential services, so they’re exempt from stay-at-home orders. 

On Thursday, the Appraisal Institute, along with the National Association of Realtors, the American Society of Appraisers, the American Society of Farm Managers and Rural Appraisers, and the Massachusetts Board of Real Estate Appraisers told the National Governors Association, the National Association of Counties, the U.S. Conference of Mayors and the National League of Cities that they are concerned about ramifications and unintended consequences if appraisal services are not deemed to be essential services. 

They collectively asked the groups to exempt appraisers, stating, “Appraisers are performing critical and timely services for real estate-related transactions, many of which will continue to take place during this crisis, and that will help to keep the economy functioning.” 

“Everyone’s goal is the same – to protect the health and well-being of our citizens,” the joint letter stated. “But we must also protect and preserve the fabric of our communities and the critical infrastructure that supports and protects us all.”

Ken Chitester, communications director with the Appraisal Institute, said the Illinois Executive Order 2020-10 best deals with the provision of appraisal services as an essential service for financial institutions and as a regulated professional service.

The appraisers who are still operating and going into houses are advised to take adequate precautions to protect themselves, including social distancing, use of personal protective equipment and limited human interaction. 

While the associations are working hard to exempt appraisers, the Appraisal Institute added that if an appraiser doesn’t feel comfortable entering a property, they can refuse the assignment and seek work that doesn’t require an interior inspection. 

“In fact, major users of appraisal services have temporarily changed their policies in the past week to facilitate and encourage exterior-only or drive-by appraisals that avoid person-to-person contact,” Chitester said. 

Apart from the letter, the government has announced initiatives to lessen the need for appraisals during the COVID-19 pandemic. Earlier this week, the Federal Housing Finance Agency stated that it is directing Fannie Mae and Freddie Mac to ease their standards for both property appraisals and verification of employment. The entities said that they would use “appraisal alternatives to reduce the need for appraisers to inspect the interior of a home for eligible mortgages.” 

As the news continues to develop, there are appraisers like Brady Enlow, who is based in Texas, who are opting to conduct business while taking the necessary precautions as outlined by the federal and local governments in his market area.

“I believe this is related to our integral part of the financial services industry,” Enlow said. “However, it should be noted that I am aware of some peers that are not working during the pandemic, or at least only completing appraisal orders that do not require an interior inspection.”

Given the rapid spread of the coronavirus, Enlow added, “The fact that appraisers are essential workers in some places does not mean that all appraisers will continue to do interior site visits.  I think many people across the country are fearful and don’t want to put themselves at heightened risk.” 

This is a developing story and will be updated with information and quotes as they come in.

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Zillow is terminating closing contracts, citing coronavirus concerns

The concept and perceived benefit of iBuyers rests in the little “i” in front of the word. It stands for “instant,” because when a homeowner chooses to sell their home through an iBuyer, they simply fill out a form, get a bid and can sell within a short period of time.

For the seller, this means no staging, no open houses and no need to wait on the buyer to get their affairs in order. But what happens to the seller when iBuyers suddenly stop buying?

Over the past few weeks, iBuyers across the board have been pressing pause on the service, citing coronavirus concerns.

In a town hall conference call on Monday, Zillow Co-Founder and CEO Rich Barton said that the company would work with customers the best that they can, given the situation.

“We are working with existing customers to cancel our existing contracts to the greatest extent we can. We’ll do this in a humane way,” Barton said. “This is clearly a material adverse change, so we’ll be taking that position and then evaluating, on a case-by-case basis, what we actually do and using some financial incentives to largely extricate – to hopefully largely extricate ourselves from those transactions.”

Meanwhile, Jeramiah Dooley is trying to sell his townhome in Charlotte, North Carolina, through Zillow Offers. He told HousingWire he chose Zillow in comparison to other iBuyers because it was the best offer he received.

“We took [the offer] and signed the contract on January 13, and they gave me up to 90 days to close which was perfect because I am scheduled to actually move on the 30th of this month,” Dooley said. “Then the day before yesterday, I got the same email that looks like everyone has gotten, basically blaming the latest public health orders issued for a wholesale cancellation of every house that Zillow had under contract to buy.”

Dooley said he was given 48 hours to choose between two options from Zillow. Zillow would either give him $5,000, which is $4,000 more than the earnest money that they would forfeit for breaking the contract, or they’d pay all of the sellers costs for a local Realtor group to put the house up on the market.

After he accepted the offer to take the $5,000 payment, Dooley was sent a “Coronavirus Termination of Real Estate Agreement” from the iBuyer.

Now paying two mortgages, Dooley said he has another important decision to make.

“I can refinance the mortgage on the house that was under contract but then I lose all of the equity that is in it,” Dooley said. “And I don’t realize anything out of the transaction but the mortgage gets lower. I can try to rent it out, or I can just hold on for however long it takes for the housing market to get back to normal, and then figure out if there’s a market out there to buy it, and I don’t really have a whole lot of choices.

According to Dooly, if the iBuyer didn’t hear from him in 48 hours, Zillow would pull the contract.

This was the same case for Crystal and Nicholas Thornton, who used Zillow Offers in Marietta, Georgia, to sell their home quickly and move into a new one with profits from their current house as a downpayment.

The Thorntons were also offered the two choices, but were disappointed in the outcome of the whole transaction.

“We’re going to stay put because part of the reason that this was so important is because once we sold this house, that also helped us with our 20% down payment,” Thornton said. “That was the main reason why we went with Zillow because if you do it the traditional way, you basically have to wait and hope that people come look at the house. Once you’re on the contract, they follow through with it.”

“We’re not in a position where we can just put our house up for sale and then purchase another home only to have two mortgages, because we want to have that 20% down because we don’t want that PMI insurance,” Thornton continued. “So that’s one of the main reasons that we went with Zillow Offers, because with what we were trying to get, and then the school zone, size, and the price, those are rare. So this was just supposed to work, there’s no reason this shouldn’t have worked.”

In a statement from Zillow Spokesperson Viet Shelton, the company said they hope to pick things back up again once the COVID-19 dust settles.

“We are incredibly sorry for the inconvenience and disruption people may experience as a result of our decision to pause home buying through Zillow Offers,” Shelton said. “This is not a decision made lightly, and was solely driven by COVID-19 health concerns and resulting market uncertainty. In addition to providing added financial support to help each seller, we are also doing our best to support our buyers in contract who can no longer purchase their home from Zillow. These are unprecedented times and we are committed to re-engaging customers through Zillow Offers as soon as it is viable to do so.”

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Homebuilders: An essential business that “backstops the economy”

As the housing industry adapts to navigate COVID-19, there is one sector that is mostly carrying on with business as usual. Even as states are locking down and ordering residents to stay at home, homebuilders are continuing to work. That’s because every state except Pennsylvania has declared homebuilders essential workers, according to the National Association of Home Builders CEO Jerry Howard. 

According to Howard, homebuilders are going to propel the economy forward after the coronavirus recession. “If you keep our demands moving forward, you will keep other sectors engaged, and hopefully help get them through this downtime,” Howard explained. 

But that isn’t the only reason why homebuilders need to keep working.

Homebuilders are essential workers

Unlike other members of the housing industry that have flexed their remote capabilities in the past weeks, builders, for obvious reasons, don’t have this opportunity and remain working on site.

“Because of the nature of our business, it’s very easy to comply with the safety standards,” Howard said. “It’s easy to have fewer than 10 people on a job site. It’s easy to keep those people who are onsite six-feet apart.”

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Fed Chairman contradicts Trump’s coronavirus timeline

In a rare television interview, Federal Reserve Chairman Jerome Powell told Today show co-anchor Savannah Guthrie the U.S. economy can’t reopen until the coronavirus pandemic is under control.

“The virus is going to set the timeline,” a grim-looking Powell said on the NBC morning show on Thursday.

Powell’s comments contradict President Donald Trump’s calls for “packed churches” on Easter, just over two weeks away. Easter Sunday would be a “beautiful timeline” for reopening the economy, Trump said at a press briefing at the White House on Tuesday.

The Fed chairman had a different outlook.

“The sooner we get the spread of the virus under control, people will regain confidence,” Powell said in the interview. “When they become confident that is the case, they will very willingly open their businesses up, go back to work, the consumer will be spending. So I think the first order of business will be to get the spread of the virus under control and then resume economic activity.”

The head of the central bank rarely gives sit-down interviews. He typically only speaks to reporters during formal press conferences after the Fed’s meetings to answer questions on monetary policy. During the financial crisis, as the U.S. teetered on the brink of a depression, Ben Bernanke, then chairman of the Fed, never took part in a TV interview.

While Guthrie asked Powell the obligatory question about an economic recession, and Powell affirmed the U.S. likely is experiencing a GDP contraction, that wasn’t the news. There is no major U.S. economic forecaster who isn’t projecting a recession.

However, the chairman’s projected it likely would be short, and the rebound sharp. The Fed pledged on Monday it would buy unlimited bonds and take other measures to keep credit flowing.

“This is a unique situation,” said Powell. “This is not a typical downturn” because it’s not due to an underlying weakness in the economy or instability in the banking system, he said.

Republican and Democratic state governors have issued “stay at home” orders for more than half the U.S. population, restricting activity to necessary tasks such as shopping for food. The goal is to slow the spread of the coronavirus to avoid overwhelming hospitals.

States with stay-at-home orders include Ohio, Michigan, Colorado, Connecticut, Massachusetts, Louisiana, Minnesota, New Jersey, New Mexico, New York and Utah. Other states, such as Texas and Pennsylvania, have issued restrictions in some counties.

Part of the reason people are being urged to stay at home is the breakdown in testing – in the absence of a quick way to know who is carrying COVID-19, people have to act as if anyone might be carrying the disease. Nations doing widespread testing, like Iceland, have found about half the people who test positive for the disease are showing no symptoms, yet are still contagious.

The way public health officials traditionally get epidemics under control is testing to identify and isolate the sick, tracking their contacts, and seeing if those people have been infected – much like South Korea handled the pandemic.

The U.S. and South Korea had their first cases of coronavirus detected on the same day. South Korea quickly ramped up to more than 10,000 tests a day, many of them in drive-through facilities, with most people getting their results within hours. The COVID-19 outbreak peaked in that nation of 51 million people on March 2 and has been in sharp decline since then, according to data from Johns Hopkins University.

In the U.S., testing for COVID-19 is still limited, and the disease is still on the upswing. Public health officials in many areas of the country have said in recent days that tests are restricted to health care workers and hospitalized patients because of a shortage of test kits, swabs to administer the tests, and protective equipment to keep safe the workers doing the testing. In most cases it takes days, and sometimes more than a week, to get results.

“We would tend to listen to the experts,” for setting a timetable to resume normal activity, Powell said in the NBC interview, citing Dr. Anthony Fauci, the director of the National Institute of Allergy and Infectious Diseases and a member of the White House Coronavirus Task Force.

Trump has nixed that type of sentiment, saying at a White House briefing on Tuesday that if public health experts had their way they would “shut down the entire world.” The president pointed out in a tweet on Tuesday that people are killed in car crashes, but the U.S. still allows driving.

“Look at automobile accidents, which are far greater than any numbers we’re talking about,” Trump said in the tweet. “That doesn’t mean we’re going to tell everybody, ‘No more driving of cars.’ So we have to do things to get our country open.”

In fact, while the White House issued guidelines recommending social distancing for 15 days to slow the spread of the coronavirus, Trump didn’t shut down any states, and it would be difficult for him to force unwilling governors to rescind those orders.

Powell said in the Today interview it’s better to rely on the experts.

“We’re not experts in pandemics over here,” he said, referring to the Federal Reserve. “We don’t get to make that decision. I would say that we would tend to listen to the experts.”

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CFPB releases lenders from quarterly HMDA reporting

The Consumer Financial Protection Bureau is relaxing some of its requirements for lenders as coronavirus continues to spread. Temporarily, the CFPB will no longer require certain lenders to report quarterly information under the Home Mortgage Disclosure Act.

The CFPB said it is working to provide flexibility to enable financial institutions to work with consumers as they respond to COVID-19, the disease caused by the coronavirus. Because of the pandemic, it will postpone some data collections from the industry to allow lenders to focus on responding to consumer needs. Currently, at least 200 million people in 21 states, 47 counties and 14 cities are being urged to stay home, according to the New York Times.

“As consumers seek temporary relief from lenders, the
pandemic is impacting the operations of financial companies that are eager to
help their customers during this unprecedented time,” CFPB Director Kathleen Kraninger
said.  “Our actions today are temporary
and targeted to support consumers by allowing financial companies to focus
their resources on assisting consumers.”

And the mortgage industry is certainly working to do just that. The mortgage industry’s biggest trade and lobbying groups are banding together to push the federal government for widespread relief for all borrowers affected by the coronavirus outbreak in the U.S.

In addition to not expecting HMDA quarterly reporting, the CFPB
will also not expect the reporting of certain information related to credit
card and prepaid accounts under the Truth in Lending Act, Regulation Z, and
Regulation E. This includes the annual submissions concerning agreements
between credit card issuers and institutions of higher education; quarterly
submission of consumer credit card agreements; collection of certain credit
card price and availability information; and submission of prepaid account
agreements and related information.

“The Bureau, along with our state and federal partners, have
released prior guidance encouraging financial institutions to work
constructively with borrowers and other customers affected by COVID-19 to meet
their financial needs,” Kraninger said. “We will continue to issue additional
guidance and policies to facilitate the ongoing collaborative relationship
between companies and their customers during this time.”

The CFPB said lenders should continue collecting HMDA data
to report it in its annual filings, and that it will provide new information when
lenders need to resume quarterly HMDA reporting.

The following data collections are being postponed:

  • A survey of financial institutions that seeks information on the cost of compliance in connection with pending rulemaking on Section 1071 of the Dodd-Frank Act
  • A survey of firms providing Property Assessed Clean Energy financing to consumers for the purposes of implementing Section 307 of the Economic Growth, Regulatory Relief and Consumer Protection Act.

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Clear Capital launches new remote inspection tool

Real estate technology company Clear Capital has launched a new homeowner-enabled appraisal inspection tool, which adheres with encouraged social distancing protocols in light of the coronavirus.

OwnerInsight is a tool that offers homeowners high-quality information and images of the interior and exterior of their homes to lenders, appraisers, and appraisal management companies through a secure interface.

Kenon Chen, executive vice president, corporate strategy of Clear Capital, told HousingWire that this free service will benefit both the user and consumer.

“Over the past couple of weeks, we have witnessed firsthand the difficulty of navigating physical appraisal inspections,” Chen said. “Whether it’s a shelter in place area, or even just an area where you’re getting the borrower, their occupants and the appraiser comfortable with physical inspection, it is a difficult thing.”

“We see it causing impacts and delays to the lending process,” Chen continued. “We were already looking at potential solutions for alleviating that, not only for our own company, but for the industry at large. We were happy to see the guidelines that were put out this week from the FHFA and GSEs on ways to reduce friction in the appraisal process, by enabling both desktop appraisals to be performed as well as exterior appraisals.”

OwnerInsight was built to work on camera-enabled mobile devices with no need for app downloads, with photo metadata captured to ensure protection against fraud.

The tool, which will be launched the week of March 30, has long term benefits for lenders, according to Chen.

“I really feel like it needs to be done the right way, in a way that also puts protections in there around fraud, and other aspects,” Chen said. “We have already been working on what the next generation of this was going to look like, including ways to capture the home in a completely digital format and 360 [degree] format. That’s something we’ve put together we’re pioneering as well, this is a stepping stone towards that.”

Clear Capital is also partnering with Ellie Mae, to make OwnerInsight available to lenders who are on the Ellie Mae Digital Lending Platform via Encompass Partner Connect.

“During this unprecedented time, the need for innovative technology solutions that keep mortgage processes moving forward while limiting in-person interaction is critical,” said Parvesh Sahi, senior vice president of Business Development at Ellie Mae, in a statement. “Clear Capital’s OwnerInsight will give our lenders the ability to connect homeowners and appraisers while ensuring a compliant and efficient mortgage process to solve both immediate and long-term lender needs.”

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Record-breaking 3.28 million people file for unemployment

When Goldman Sachs recently predicted that 2.25 million people would file for unemployment last week, it made headlines nationwide (including here on HousingWire). That figure would have obliterated the previous weekly record that has stood since 1982.

But the actual figure is far, far worse than Goldman Sachs predicted. According to the Department of Labor, nearly 3.3 million people filed for unemployment in the week ending March 21, 2020, an increase of more than 3 million from the week before (282,000 to 3.28 million).

That figure shatters the previous weekly record of 695,000 initial jobless claims, which was set in 1982, and it’s a clear indication of just how bad things are for millions of people around the country. The Labor Department report puts it succinctly: “This marks the highest level of seasonally adjusted initial claims in the history of the seasonally adjusted series.”

For more evidence of just how outsized the recent data is, click on the image below. The massive spike on the far right of the graph is the number of recent jobless claims.

The history of jobless claims

According to the report, every single state and U.S.
territory saw an increase in jobless claims from week-to-week.

The state with the most new unemployment claims was Pennsylvania,
which saw its jobless claim total climb from an estimated 15,439 in the week ending
March 14 to 378,908 in the week ending March 21. That’s an increase of 2,354%
in just one week.

The other states with the largest number of new unemployment claims were Ohio (which saw its figure increase from 7,046 to 187,784 in one week); New Jersey (which saw its figure increase from 9,467 to 155,454 in one week); Massachusetts (which saw its figure increase from 7,449 to 147,995 in one week); Texas (which saw its figure increase from 16,176 to 155,657 in one week); and California (which saw its figure increase from 57,606 to 186,809 in one week).

Figures of that size mean that millions of people are now
out of a job due to coronavirus-related shutdowns and layoffs. And that means
that there’s about to be a massive flood of delinquent mortgages and overdue
rent payments as many people are unable to make their next payment.

The housing industry is already mobilizing to try to limit the impact of these missed payments, with industry leaders offering mortgage forbearance, deferrals, foreclosure and eviction moratoriums, and other options for borrowers and renters.

But the sheer number of people who are suddenly out of a job is something that’s literally never been seen before. “These layoffs will lead to real hardships for millions of households across the country,” Mortgage Bankers Association Senior Vice President and Chief Economist Mike Fratantoni said in a statement.

“Mortgage servicers are already hearing from a substantial
number of homeowners who are concerned about their ability to make their
mortgage payments on time. The mortgage industry is ready and willing to help
through the use of established forbearance programs, allowing borrowers who
have lost their jobs or been furloughed as a result of the virus the ability to
delay their payments for at least six months,” Fratantoni added.

But widespread mortgage forbearance, which will likely be needed with so many people suddenly out of work, will cause some serious problems in the secondary mortgage market. “However, the unprecedented and unexpected wave of forbearance requests will place a significant strain on mortgage servicers. Even if a quarter of all borrowers request forbearance for six months or longer, cash demands on servicers could exceed $75 billion and could climb well above $100 billion,” Fratantoni said.

That’s why the MBA this week joined several other groups to ask the government for a solution to the payment advance situation.

When a borrower is unable to make their monthly mortgage payment, the mortgage servicer must still pay the principal and interest to investors, as well as the real estate taxes, homeowners’ insurance, and mortgage insurance on the borrower’s behalf. Servicers typically retain some reserves to cover such shortages, but they simply don’t have enough money to cover the mortgage payments if a widespread forbearance program is put in place.

“That is why it is absolutely critical for the Federal Reserve and U.S. Treasury to immediately establish a liquidity facility so that otherwise solvent mortgage servicers can borrow from the Fed to support these forbearance programs,” Fratantoni said. “This needed backstop for servicers will ultimately support homeowners during these challenging times.”

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U.S. economy grew 2.1% in Q4

The U.S. GDP grew at an annual rate of 2.1% in the fourth quarter of 2019, according to the third estimate from the Bureau of Economic Analysis, showing the strength of the economy before the COVID-19 pandemic hit the U.S.

The estimate in Thursday’s report is based on more complete source data than what was available in the prior report. According to the BEA, the results match the prior quarter’s pace.

In Q4, a downturn in imports and an acceleration in government spending were offset by a larger decrease in private inventory investment, according to the BEA.

Homebuilding made a
positive contribution to GDP, as well as personal consumption expenditures.

The GDP increase also reflected positive contributions from
exports, federal government spending, and state and local government spending,
which were partly offset by negative contributions from private inventory
investment and nonresidential fixed investment.

Imports, which are a subtraction in the calculation of GDP,
decreased by 8.4%.

Current-dollar GDP increased by 3.5%, or $186.6 billion, in
Q4 to a level of $21.73 trillion. This is down from the third quarter’s 3.8%,
or $202.2 billion.

The gross domestic price purchase index increased by 1.4% in Q4, holding its ground
from Q3’s increase of 1.4%. Personal consumption expenditures increased by 1.4%,
down from 1.5% in the previous quarter.

Here are updates to the previous estimate:

Real GDP: Remained unchanged at 2.1%

Current-dollar GDP:  Remained unchanged at

Gross domestic purchases price index:  Remained
unchanged at 1.4%

Personal consumption expenditures: Increased
to 1.4%, up from the last estimate’s 1.3%

The chart below shows that GDP sits at the same level as
Q3, but is more than one percentage point above Q4 of 2019:

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Mortgage rates drop as the Fed moves to stabilize the economy

The average U.S. fixed rate for a 30-year mortgage fell to 3.5% this week, representing the first decline in three weeks, according to Freddie Mac.

The rate is 15 basis points below last week’s level of 3.65% and is more than half a percentage point lower than the 4.06% of the same week a year ago.

In addition to a drop in the 30-year fixed-rate, the 15-year fixed rate averaged 2.92%, down from 3.06% last week. However, the five-year Treasury-indexed hybrid adjustable-rate mortgage averaged 3.34%, up from last week’s rate of 3.11%. 

The Federal Reserve’s efforts to stabilize markets with a pledge of unlimited bond-buying, including mortgage-backed securities, likely caused this week’s rate decline, said Sam Khater, Freddie Mac’s chief economist.

“The Federal Reserve’s swift and significant efforts to stabilize the market were much needed and helped mortgage rates drop for the first time in three weeks,” Khater said. “Similar to other segments of the economy, real estate demand is softening. However, the combination of the Fed’s actions and pending economic stimulus will provide substantial support to the mortgage markets.”

On Wednesday, the Senate passed a $2 trillion federal rescue package that
is designed to financially aid American households struggling to make ends meet
during the COVID-19 pandemic.

Almost half of America’s population lives in states that have implemented stay-at-home orders in an effort to slow the spread of the disease.

The government’s package, which is now the
largest-ever stimulus bill in U.S. history, includes $250 billion in direct
checks to Americans and boosts unemployment benefits to help people pay their
bills, including rent or mortgages.

There’s also $350 billion in loans for smaller businesses, aimed at keeping workers on the payrolls. The disbursement of those funds will be overseen by the Small Business Administration.

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