Morning Report: CoreLogic predicts low mortgage rates for the next 3 years

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S&P futures 3689 -8.6
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10 year government bond yield   0.94%
30 year fixed rate mortgage   2.82%

Stocks are lower this morning as California institutes a strict lockdown amidst a rise in COVID-19 cases. Bonds and MBS are down.


The upcoming week should be relatively quiet with the Fed in the quiet period ahead of next week’s FOMC meeting and limited economic data. We will get inflation and productivity data this week and that is about it.


CoreLogic released its three-year economic outlook, and it predicts low mortgage rates through 2023 as well as rising home prices. They forecast that mortgage rates will average around 3.2% for 2021 through 2023. This means that the refi boom will continue.

They anticipate rates will remain below 3% for early 2021.

Second, they see the Millennial generation will be a huge tailwind for housing demand. The largest age cohort of the Millennial generation is in their late 20s and, and the median age for the first time homebuyer is age 33. The first time homebuyer has been underrepresented in the homebuying population, averaging about 30% of home purchases. Historically that number has been closer to 40%. So, as homebuilders ramp up to satisfy this demand, the purchase side of the business should remain robust for the next several years.

Finally, CoreLogic expects home price appreciation to slow as builders ramp up production and the supply / demand imbalance gets fixed. As the first time buyers become a bigger percentage of the mix, lower-priced starter homes will be act to pull the average prices down.

Overall, the report is bullish for housing and the mortgage origination industry. The Fed seems to be in no hurry to increase rates, and the global vortex of low and negative sovereign yields should keep a lid on the 10 year. Plus the Fed is thinking of increasing MBS purchases, which will keep mortgage rates low. Overall, this should be a great environment for the origination business going forward.

22 Responses

  1. Interesting read:


    • Interesting, but left me a bit confused, Joe. It early blames the British class system and late blames Brit individualism. It seems to yearn for a leftist Labor Party rather than a center left one. And I don’t see how a bunch of socialists would have added clarity to the Brexit debate.

      Labour did turn sharply left after Blair, didn’t it? What has that helped?


      • Yeah, that probably reflects the general confusion of the author, Russell Brand.

        And I suspect the omission of Corybn is intentional as it doesn’t support his argument.

        Brand is sort of a philosopher/comedian. His NetFlix specials are amusing as are his BBC interviews.

        I thought this was a good observation:

        “Given that politics is now largely about opinions — things you say rather than things you do”


        • The observation does seem to fit politics as tribal media inflamed entertainment, certainly. I assume [by assumption] that has been and will continue to be cyclical. Else we never get the roads and bridges fixed.


        • When people discuss all of the Biden votes that were just for Biden but no downticket races, people may shout “fraud” or “people always do that” but why aren’t more people shoting “why aren’t the people voting for the politicians more likely to actually impact their lives in some way?!?!”


        • Local politics still seems less polarized than national ones, which is where most of the road fixing occurs.


        • That certainly is the case in both mainstream and social media. And we’re brewing a new generation of social media pols.


      • He seems to me to be arguing for some sort of amorphous 3rd way that is helpful to the economic underclass, but what or how is apparently not remarked upon.

        I do not disagree with the sentiment that other options should be entertained but for all his demonstrable vocabulary, identifying that neither political side is ideal is very easy. Coming up with solid policy approaches to address specific problems are what’s required, in addition to some basic QA: policy approaches should be rescinded if they fail to achieve their results. Which isn’t likely to happen, because people tend to become dependent on government policy approaches, whatever they are.

        And far too many people enjoy both financial and social success, and ego-validation, from their tribal membership. So getting a sufficient number of people to support boring, incremental change that is cost-justified and audited for performance is just not going to happen, IMO.


  2. Long a Holdout From Covid-19 Restrictions, Sweden Ends Its Pandemic Experiment
    Government imposes mandatory measures after failing to contain new surge in infections

    WSJ today


    • Do you have a link to that Mark…………I tried to find it but didn’t see in today’s issue online. I only have a few articles I can read there a month.


      • Long a Holdout From Covid-19
        Restrictions, Sweden Ends Its Pandemic
        Government imposes mandatory measures after failing to contain new surge in infections
        By Bojan Pancevski
        Dec. 6, 2020
        After a late autumn surge in infections led to rising hospitalizations and deaths,
        the government has abandoned its attempt—unique among Western nations—to combat the pandemic through voluntary measures.

        Like other Europeans, Swedes are now heading into the winter facing restrictions ranging from a ban on large gatherings
        to curbs on alcohol sales and school
        closures—all aimed at preventing the country’s health system from being swamped by patients and capping what is already among the highest per capita death tolls in the world.

        The clampdown, which started last month, put an end to a hands-off approach that had made the Scandinavian nation a prime example in the often heated global debate between
        opponents and champions of pandemic lockdowns.

        Admirers of the Swedish way as far away as the U.S. hailed its benefit to the economy and its respect for fundamental freedoms. Critics called it a gamble with human lives, especially those of the most vulnerable. With its shift in strategy, the
        government is now siding with those advocating at least some mandatory restrictions.

        When the pathogen swept across Europe in March, Sweden broke with much of the continent and opted not to impose mask-wearing and left known avenues of viral transmission such as bars and nightclubs open, leaving it to citizens to take their own precautions. As late as last month, Swedes enjoyed mass sporting and cultural events and health-care officials insisted that the voluntary measures were enough to spare
        the country the resurgence in infections that was sweeping Europe. Weeks later, with total Covid-19-related deaths reaching almost 700 per million inhabitants, infections growing exponentially and hospital wards filling up, the
        government made a U-turn.

        In an emotional televised address on Nov. 22, Prime Minister Stefan Löfven pleaded with Swedes to cancel all
        nonessential meetings and announced a ban on gatherings of more than eight people, which triggered the closure of
        cinemas and other entertainment venues. Starting Monday, high schools will be closed.

        Last week Sweden’s total coronavirus death count crossed 7,000. Neighboring Denmark, Finland and Norway, all similar-sized countries, have recorded since the start of the pandemic 878, 415 and 354 deaths respectively. For the first time
        since World War II, Sweden’s neighbors have closed their borders with the country.

        “We don’t like to say that Sweden has been the black sheep, but it has been the different sheep,” said Vivikka Richt, spokeswoman of the Finnish health ministry.

        Dr. Nowak said medical personnel had never shared the optimism of the country’s public-health agency about so-called herd immunity—population-wide resistance to a pathogen acquired through gradual exposure—and had repeatedly warned that the virus couldn’t be controlled with voluntary measures alone. One reason Sweden stuck to its approach for so long despite the warning signs is the high degree of independence and authority enjoyed by the health agency and
        other similar state bodies under Swedish law. The public face of the country’s pandemic strategy was Anders Tegnell, Sweden’s
        chief epidemiologist. Dr. Tegnell declined to be interviewed this week, but in earlier conversations with The Wall Street Journal and other media he said lockdowns were unsustainable
        and unnecessary. His agency has continued to discourage mask-wearing just as the European Center for Disease Prevention and Control, a European Union
        agency whose headquarters are located near Dr. Tegnell’s office in Stockholm, recommends wearing them.

        In recent months, Dr. Tegnell predicted that Swedes would gradually build immunity to the virus through controlled exposure, that vaccines would take longer than expected to develop, and that death rates across the West would
        converge. Instead, the West’s first coronavirus vaccine was authorized in Britain last week, Sweden’s death rate remains an outlier among its neighbors, and Dr. Tegnell acknowledged in late November that the new surge in infections showed there
        was “no sign” of herd immunity in the country.

        Meanwhile, Sweden’s laissez-faire pandemic strategy has failed to deliver the economic benefits its proponents had predicted. In the first half of the year, Sweden’s gross domestic product fell by 8.5% and unemployment is projected to rise to nearly 10% in the beginning of 2021, according to the central bank and
        several economic institutes.

        Businesses such as restaurants, hotels and retail outfits are facing a wave of closures; unlike in the rest of Europe, where governments coupled restrictions with generous stimulus, Swedish authorities have offered comparatively less
        support to businesses since they didn’t impose closures.
        “This is worse than a lockdown and it has been a catastrophic year for everyone in the business: They haven’t closed us so they don’t give us any substantial support, yet they say to people ‘don’t go to Economic Downturn restaurants’,” said Jonas Hamlund, who was forced to close one of his two
        restaurants in the coastal city of Sundsvall, laying off 30 people.

        Lulu, there is more, with graphs and photos and the political implications for the government and such. here is the cite if you can get in:


        • So Sweden has 687.09 per million?
          Italy had 996.36 per million.
          USA has had 856.03 per million.
          United Kingdom had 914.92 per million.

          With South Korea had like 10 per million and Japan had 18 per million.

          So unless they go full South Korea–whatever that means–not sure what changing things will accomplish.

          Also I’m highly suspicious that we and the UK and so on are counting COVID deaths the same way South Korea and Japan are. Might be but I’m dubious. I’m suspecting they may not be counting a positive COVID test in someone with advanced heart disease as having died from heart disease or cancer, whatever the likely co-morbidity might be.


        • KW:

          Also I’m highly suspicious that we and the UK and so on are counting COVID deaths the same way South Korea and Japan are.

          As I have been saying all along, the best metric to look at, in order to avoid counting discrepancies/manipulations/subjectivity is to look at excess deaths. When someone dies, they are dead. There is no subjective judgement required about what caused it, how it should be classified, etc. Dead is dead, whether from heart disease, cancer, suicide, or covid. If a new disease suddenly appears and is causing deaths that it has never caused before, it will show up as obvious on an excess deaths graph.

          See the link below which graphs the z-score for weekly deaths in all European nations individually. The z-score represents the relationship of weekly deaths in any given week to the average number of deaths for that week since 2015, so it is essentially a measure of weekly excess deaths. The more positive or negative the z-score, the bigger the divergence from the average, so a more positive z-score indicates a greater number of excess deaths. (You need to page down to get to the z-score graphs.)

          Note that there is nothing outstanding or notable about the graph for Sweden. There are, of course, many other European nations with lower z-scores during the covid period, but there are also many other European nations with higher z-scores. Sweden’s graph has pretty much the same shape as any other nation that was significantly impacted by covid….there is a spike starting around week 11 and ending around week 20. In many countries there seems to be a second, smaller spike in more recent weeks, but Sweden seems to have so far avoided that one.

          There does appear to be several countries that show pretty much no particularly aberrant z-scores at all, and it would be very interesting to try to find out why that is. But there doesn’t seem to be any correlation that I can see between countries with particularly draconian lock-down/mask mandates and excess deaths. There are plenty of countries with much more strict measures than Sweden that have done both much better and much worse than Sweden. Certainly there are a lot of politicians, policy advisors, and people-at-large who are hugely invested in the idea that draconian lock-down and mask policies are saving the human race from extinction, but it doesn’t appear to me that the Swedish “experiment” supports their case, even if Sweden itself is now changing course.

          Follow the science!!!!


        • Yay, California!! Governor Newsome is just awesome!!! I wish he ran the whole country!!!!


        • Thanks Mark and Jnc.


  3. Well played Mexico:

    “AMLO Isn’t Pro-Trump. He’s Proving a Point About Foreign Election Meddling.

    Kurt Hackbarth

    AMLO’s decision to hold off on congratulating Joe Biden on his presidential victory has ruffled feathers among establishment Democrats. But the United States stands to learn a lesson from remaining impartial in foreign elections.”


  4. Joe, this is an interesting insight into how an active lefty group will try to push JB on court nominations – interesting because they oppose the two best liberal appellate lawyers out there because the two supported Gorsuch and Kavanaugh for SCt seats, and because they could torpedo their own favorite choice by their inability to comprehend ordinary politics.


    • I don’t see those sorts of outside groups having veto power over Biden. He won without them.


    • A more interesting line of criticism on Biden’s potential Defense Secretary nominee:


      • I do remember his folding under a withering barrage of questions from McCain about Syria.

        Interesting that JB would pick someone who needs the waiver when so many Ds on the ASC said they would waive Mattis but were not going to do another waiver and make it seem ordinary to do so.

        This criticism seems reasonable – doesn’t raise the implicit question of undue influence among black pressure groups. Doesn’t have to.


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