Mortgage Rate Forecast: October 2009

The Mortgage Interest Rate Lock Advisory for Salem NH for October 30, 2009

Here are some of the events affecting mortgage interest rates today in Salem, NH.

What the Mortgage Backed Securities Market is Doing Today:

The price of the FNMA 30-Year 4.5% MBS coupon opened at 100.97 this morning - up 6/32 from yesterday's close.

The FNMA 30-Year 4.5% MBS coupon is currently trading at 100.97 - the same as its opening. Remember, on mortgage backed securities (MBSs), as the price goes up, the yield comes down - and mortgage interest rates come down with it. I expect that mortgage interest rates will be the same or 0.125% better in price this morning as compared to yesterday.

Recent Activity in Mortgage Backed Securities:

The chart below shows the price trend of the FNMA 30-Year 4.5% coupon over the past 30 days:

Economic Reports, News, and Events Affecting Mortgage Interest Rates Today:

• Personal Income and Outlays Report for September - as expected, there was no change in income, and there was a 0.5% decline in consumer spending in September. This follows a 0.2% rise in personal income and a 1.3% rise in consumer spending in August. While year-to-year income is up 1.5%, it's the lowest increase on record. Meanwhile, real consumer spending declined 0.6% in September after a 1.0% rise in August.
  
  This index is watched closely because consumer spending makes up two-thirds of the U.S. economy. This data gives us an indication of the consumer's ability to spend and as well as their current spending habits. A rising income indicates that consumers have more money to spend and makes economic growth more of a possibility. While the index came in as expected, consumer spending fell. This could mean a weak retail spending this holiday season. That led to an increase in prices of mortgage backed securities rose which led to a decrease in mortgage interest rates this morning.
  
  
• 3rd Quarter Employment Cost Index (ECI) - there was a 0.4% rise in employment costs last month - the same as the previous month - and is slightly less than the 0.5% increase that was expected. This index tracks employer costs for salaries and benefits. This report had no impact on the mortgage market or mortgage interest rates this morning.

• Update to University of Michigan's Index of Consumer Sentiment - the consumer confidence reading rose to 70.6, a little more than the 70.0 reading that was expected, and follows a 69.4 reading the previous month. This suggests that consumer confidence is holding fairly steady. This index is moderately important because consumer sentiment is directly related to the strength of consumer spending. This report had little impact on the mortgage market this morning.

For more anlayis on today’s economic reports and the impact is had on the markets, watch this video from CNBC:

In other news, the appropriations committees in both the House and Senate are proposing to extend the temporary conforming jumbo loans limits through 2010. The appropriations bill still face votes a full vote in both the House and Senate.

Also on tap is the extension and expansion of the homebuyer tax credit. The latest version would extend the $8,000 first-time homebuyer tax credit to home sales that go under contract by April 30 and close by June 30, 2010. A new $6,500 tax credit would be available for other home buyers who have owned a home during five of the eight previous years. Additionally, the annual income limit to qualify for the tax credit would be $125,000 if you're single and $250,000 for couples. The first-time homebuyer tax credit bill also still face votes a full vote in both the House and Senate.

There are a number of economic reports scheduled for release next week including the monthly employment situation report on Friday. The Federal Open Market Committee (FOMC) will also meet again next week. Look for more details on next week's events on Monday.

What's Happening With Mortgage Interest Rates Today:

Light to moderate volatility. Overall, it has been an active - and volatile - week for the mortgage market and mortgage interest rates. I expect that the markets will settle down today and expect to see some calmness.

My Mortgage Interest Rate Lock Advice for Today:

If I were considering financing/refinancing a home, I would...

• Lock if my closing was taking place within the next 7 days
• Float if my closing was taking place between 8 and 30 days
• Float if my closing was taking place between 31 and 45 days
• Float if my closing was taking place between 46 and 60 days

This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of any or all other borrowers.

Get today's mortgage interest rates for your situation in Salem, NH.

Mortgage loans that were labeled subprime just a few years ago were partly responsible for the notorious real estate bubble. When it burst and let all the air out, the subprime product quickly disappeared from the bloodied scene. Many housing observers warmed up their fingers over keyboards and wrote all these tearful obituaries, believing it would be gone for good. But guess what? It's now back.

This much-criticized mortgage segment has adopted a new backer, however. Subprime used to be pretty much exclusively conventional lenders' territory, until the recent thermonuclear event. With their exit a new player emerged to fill the void, Ginnie Mae, a wholly-owned government corporation created within HUD. Ginnie Mae is another adorable name in the mortgage arena, besides Fannie Mae and Freddie Mac.  

Ginnie Mae operates a little differently from its above-mentioned and better-known sister agencies. It guarantees investors timely payment of interest and principal on MBS, or mortgage-backed securities, supported by federally insured loans, meaning FHA, and federally guaranteed loans, in this case VA. The majority of its guarantees go to these two organizations. Ginnie Mae is not in the business of buying or selling loans or issuing MBS.

According to the Federal Reserve Bank of San Francisco, FHA mortgage lending has skyrocketed in the last several months, achieved with the Ginnie Mae's guarantees. In 2006 subprime paper accounted for about 20% of all home loans. Then its market share plunged to near zero and now it is climbing back up again. San Francisco Fed asserts that today mortgage borrowers nationwide with FICO scores under 660 command slightly over 20% of the market. In short, it's back to where it was only three years ago. That raises some eyebrows. And rightfully so.

FHA has flirted with trouble lately as mortgage loan losses are mounting. Sinking property values have a lot to do with this, as are the lenient underwriting guidelines FHA uses, in other words subprime lending, and the generally weak economy. As of right now it looks as if it doesn't need a government bailout, feared by many. If home prices stabilize soon across the board, it'll be safe.  

Las Vegas valley - including communities of Mountains Edge, Summerlin, Anthem, Henderson, Southern Highlands, Green Valley and North Las Vegas - has benefited greatly from FHA mortgages. Especially first-time home buyers have been using them and the nice tax credit to provide demand in an otherwise sluggish market. Without FHA the light at the end of the tunnel for Southern Nevada housing market would be just a tiny speck

 

The Mortgage Interest Rate Lock Advisory for Scarborough ME for October 29, 2009

Here are some of the events affecting mortgage interest rates today in Scarborough, ME.

What the Mortgage Backed Securities Market is Doing Today:

The price of the FNMA 30-Year 4.5% MBS coupon opened at 101.09 this morning - down 1/32 from yesterday's close.

The chart below shows today's price trend of the FNMA 30-Year 4.5% coupon:

The FNMA 30-Year 4.5% MBS coupon is currently trading at 100.97 - down 5/32 from its opening. Remember, on mortgage backed securities (MBSs), as the price goes down, the yield goes up - and so do mortgage interest rates. I expect that mortgage interest rates will be 0.125% - 0.25% worse in price this morning as compared to yesterday.

Recent Activity in Mortgage Backed Securities:

The chart below shows the price trend of the FNMA 30-Year 4.5% coupon over the past 30 days: 

Economic Reports, News, and Events Affecting Mortgage Interest Rates Today:

• Preliminary Reading of the 3rd Quarter Gross Domestic Product (GDP) - there was a 3.5% increase in the 3rd Quarter GDP - more than expected. Analysts expected a 3.0% increase in the GDP. This is the first expansion in the economy in more than a year, but it was fueled mostly by the "Cash for Clunkers" program and the first-time homebuyers tax credit. The GDP is considered to be the benchmark measurement of economic growth because it is the sum of all goods and services produced in the U.S. The report had a major impact on the financial and mortgage markets this morning. The price of the FNMA 4.5% coupon fell sharply by 29/32 to 100.24 this morning, but quickly recovered to 101.00.
  
  
• Jobless Claims -530,000 new claims for unemployment were filed last week, 5,000 more than expected, and only 1,000 less than the new claims filed the previous week. The 4-week average fell for the 8th straight week to 526,250, the lowest since January of this year. Meanwhile, continuing claims for unemployment dropped sharply by 148,000 to 5.8 million. The overall decreasing trend in the filing of new claims for unemployment suggests that companies are laying off fewer workers. However, the large number of people who are still unemployed suggests people are having a hard time finding new jobs. This data is usually not considered to be very important to the mortgage market.
  
  
• Fed's MBS Purchase Program - The results of this week's purchases of mortgage backed securities by the Feds will be released in the afternoon. As of last Thursday, the Feds have purchased over $959 billion in mortgage backed securities this year. The Feds plan on purchasing up to $1.25 trillion in mortgage backed securities through March 31st.

In other news, $31 billion in 7-Year Notes are scheduled for auction today. If the auction is met with a strong demand, prices of mortgage backed securities may rise during afternoon trading which may in turn lead to lower mortgage interest rates. But a lackluster demand may cause investors to sell mortgage backed securities which in turn may lead to higher mortgage interest rates. There was a high demand in the auction of $41 billion in 5-Year Notes yesterday.

What's Happening With Mortgage Interest Rates Today:

Moderate to high volatility. Overall, it will be an active - and volatile - week for the mortgage market and mortgage interest rates. The most volatile day of the week will be today with the release of the preliminary 3rd Quarter GDP (as this morning already demonstrated), and the results of the 7-Year Note auction early this afternoon.

My Mortgage Interest Rate Lock Advice for Today:

If I were considering financing/refinancing a home, I would...

• Lock if my closing was taking place within the next 7 days
• Float if my closing was taking place between 8 and 30 days
• Float if my closing was taking place between 31 and 45 days
• Float if my closing was taking place between 46 and 60 days

This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of any or all other borrowers.

Get today's mortgage interest rates for your situation in Scarborough, ME.

The Mortgage Interest Rate Lock Advisory for Marlborough MA for October 28, 2009

Here are some of the events affecting mortgage interest rates today in Marlborough, MA.

What the Mortgage Backed Securities Market is Doing Today:

The price of the FNMA 30-Year 4.5% MBS coupon opened at 100.72 this morning - up 3/32 from yesterday's close.

The FNMA 30-Year 4.5% MBS coupon is currently trading at 100.97 - up 11/32 from its opening. Remember, on mortgage backed securities (MBSs), as the price goes up, the yield comes down - and mortgage interest rates come down with it. I expect that mortgage interest rates will be 0.25% - 0.50% better in price this morning as compared to yesterday.

The chart below shows the price trend of the FNMA 30-Year 4.5% coupon over the past 30 days:

Recent Activity in Mortgage Backed Securities:

Economic Reports, News, and Events Affecting Mortgage Interest Rates Today:

• Durable Goods Orders for September - there was a 1% increase in new durable goods orders - less than the 1.5% increase that was expected - and follows a 2.4% decline the previous month. Posted by the Commerce Department, this report tracks orders at U.S. factories for big-ticket items which in turn provides a measurement of manufacturing sector strength. This report had little or no impact mortgage interest rates this morning.
  
• New Home Sales Report for September - sales of new homes fell 3.6% last month to an annualized rate of 402,000, and is down from annualized rate of 429,000 new home sales the previous month. Analysts expected the report to show an increase to an annualized rate of 440,000. The decline sent the stock market lower and added to yesterday's the rally in the mortgage market. This report led to slightly lower mortgage interest rates this morning.

In other news, $41 billion in 5-Year Notes are scheduled for auction today. If the auction is met with a strong demand, prices of mortgage backed securities may rise during afternoon trading which may in turn lead to lower mortgage interest rates. But a lackluster demand may cause investors to sell mortgage backed securities which in turn may lead to higher mortgage interest rates. There was a high demand in the auction of $44 billion in 2-Year Notes yesterday.

What's Happening With Mortgage Interest Rates Today:

Moderate volatility. Overall, it will be an active - and volatile - week for the mortgage market and mortgage interest rates. The most volatile day of the week most likely will be Thursday with the release of the preliminary 3rd Quarter GDP and the results of the 7-Year Note auction.

My Mortgage Interest Rate Lock Advice for Today:

If I were considering financing/refinancing a home, I would...

• Float if my closing was taking place within the next 7 days
• Float if my closing was taking place between 8 and 30 days
• Float if my closing was taking place between 31 and 45 days
• Float if my closing was taking place between 46 and 60 days

This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of any or all other borrowers.

Get today's mortgage interest rates for your situation in Marlborough, MA.

The Mortgage Interest Rate Lock Advisory for Nashua NH for October 27, 2009

Here are some of the events affecting mortgage interest rates today in Nashua, NH.

What the Mortgage Backed Securities Market is Doing Today:

The price of the FNMA 30-Year 4.5% MBS coupon opened at 100.31 this morning - up 1/32 from yesterday's close.

The chart below shows today's price trend of the FNMA 30-Year 4.5% coupon:

The FNMA 30-Year 4.5% MBS coupon is currently trading at 100.44 - up 4/32 from its opening. Remember, on mortgage backed securities (MBSs), as the price goes up, the yield comes down - and mortgage interest rates come down with it. I expect that mortgage interest rates will essentially be the same in price today as compared to late yesterday afternoon.

The chart below shows the price trend of the FNMA 30-Year 4.5% coupon over the past 30 days:

Recent Activity in Mortgage Backed Securities:

Economic Reports, News, and Events Affecting Mortgage Interest Rates Today:

• Consumer Confidence Index (CCI) for October - the index revealed a reading of 47.7 - much less than the 54.0 reading that was expected - and is a significant decrease from last month's reading of 53.1. The decline in consumer confidence is over concerns that the job market will get worse. This index is watched closely because consumer spending makes up two-thirds of the U.S. economy. Generally, retail sales follow consumer confidence. The lower the index reading, the less likely consumers are likely to make large purchases in the near future. Because the index reading came in lower than expected, we will likely see lower mortgage interest rates this morning.

In other news, $44 billion in 2-Year Notes are scheduled for auction today. If the auction is met with a strong demand, prices of mortgage backed securities may rise during afternoon trading which may in turn lead to lower mortgage interest rates. But a lackluster demand may cause investors to sell mortgage backed securities which in turn may lead to higher mortgage interest rates.

The S&P/Case-Shiller Home Price Index released today revealed an increase in home prices for the 4th consecutive month. The Case-Shiller Composite 10 index rose 1.3% in August to 157.93 while the Composite 20 rose 1.2% to 146.00. The S&P/Case-Shiller Home Price Index tracks monthly changes in the value of residential real estate in 20 metropolitan regions across the U.S.

While Bank of America sees some appreciation in home prices, Goldman Sachs sees a false button. Watch this video to learn more:

 

What's Happening With Mortgage Interest Rates Today:

Moderate volatility. Overall, it will be an active - and volatile - week for the mortgage market and mortgage interest rates. The most volatile day of the week most likely will be Thursday with the release of the preliminary 3rd Quarter GDP and the results of the 7-Year Note auction.

My Mortgage Interest Rate Lock Advice for Today:

If I were considering financing/refinancing a home, I would...

• Lock if my closing was taking place within the next 7 days
• Lock if my closing was taking place between 8 and 30 days
• Float if my closing was taking place between 31 and 45 days
• Float if my closing was taking place between 46 and 60 days

This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of any or all other borrowers.

Get today's mortgage interest rates for your situation in Nashua, NH.

The Mortgage Interest Rate Lock Advisory for Biddeford ME for October 26, 2009

Here are some of the events affecting mortgage interest rates today in Biddeford, ME.

What the Mortgage Backed Securities Market is Doing Today:

The price of the FNMA 30-Year 4.5% MBS coupon opened at 101.62 this morning - up 1/32 from Friday's close.

The chart below shows today's price trend of the FNMA 30-Year 4.5% coupon:

The FNMA 30-Year 4.5% MBS coupon is currently trading at 100.34 - down 8/32 from its opening. Remember, on mortgage backed securities (MBSs), as the price goes down, the yield goes up - and so do mortgage interest rates. I expect that mortgage interest rates will be 0.25% - 0.50% worse in price this morning as compared to Friday.

The chart below shows the price trend of the FNMA 30-Year 4.5% coupon over the past 30 days:

Recent Activity in Mortgage Backed Securities:

Economic Reports, News, and Events Affecting Mortgage Interest Rates Today:

• There are no economic reports scheduled for release today.

What's Happening With Mortgage Interest Rates Today:

Moderate to high volatility. Overall, it will most likely be an active - and volatile - week for the mortgage market. You can expect a lot of volatility in mortgage interest rates this week. The most volatile day of the week most likely will be Thursday with the release of the preliminary 3rd Quarter GDP and the results of the 7-Year Note auction.

My Mortgage Interest Rate Lock Advice for Today:

If I were considering financing/refinancing a home, I would...

• Lock if my closing was taking place within the next 7 days
• Lock if my closing was taking place between 8 and 30 days
• Float if my closing was taking place between 31 and 45 days
• Float if my closing was taking place between 46 and 60 days

This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of any or all other borrowers.

Get the best available mortgage interest rates for your situation in Biddeford, ME!
 

The Mortgage Market Watch for the Week of October 26, 2009

Events Affecting the Mortgage Market This Week:

There are Treasury Note auctions scheduled for every day this week except Friday. However, the two Note auctions that are most likely to influence mortgage interest rates are the 5-Year Note auction on Wednesday and the 7-Year Note auction on Thursday. If these auctions are met with a strong demand, prices of mortgage backed securities may rise during afternoon trading on Wednesday and Thursday which in turn will lead to lower mortgage interest rates. But a lackluster demand may cause investors to sell mortgage backed securities which in turn will lead to higher mortgage interest rates. A week ago, the Treasury sold only $12 billion worth of 30-Year bonds. That auction didn't meet market expectations and caused a large increase in mortgage interest rates.

There are a number of quarterly earnings reports scheduled for release again this week that could affect the stock markets. If the earnings reports are good or better than expected, then you can expect traders to sell bonds and mortgage backed securities and move those funds into stocks. If, on the other hands, earnings reports are worse than expected, then you can expect traders to sell stocks and move those funds into bonds as a safe-haven.

Economic Reports to be Released This Week:

There are seven economic reports scheduled for release this week that could have an impact on the mortgage market, so expect a volatile week for mortgage interest rates.

Monday, October 26th:

• There are no economic reports scheduled for release today.

Tuesday, October 27th:

• Consumer Confidence Index (CCI) for October - this index is watched closely because consumer spending makes up two-thirds of the U.S. economy. This index gives us a measurement of consumer willingness to spend. It's expected to show a reading of 54.0, an increase from last month's reading of 53.1. Generally, retail sales follow consumer confidence. The higher the index reading, the more likely consumers are likely to make large purchases in the near future. If the index reading comes in higher than expected, we will likely see higher mortgage interest rates as prices of mortgage backed securities fall.

Wednesday, October 28th:

• Durable Goods Orders for September - posted by the Commerce Department, this report tracks orders at U.S. factories for big-ticket items which in turn gives us a measurement of manufacturing sector strength. Analysts are forecasting a 1.5% increase in new orders. If we see a larger than expected increase in orders, we will likely see higher mortgage interest rates as prices of mortgage backed securities fall.
  
  
• New Home Sales Report for September - this report is expected to show an increase in sales of new homes to an annualized rate of 440,000, up from 429,000 the previous month. However, this report usually has little or no impact on mortgage interest rates.

Thursday, October 29th:

• Preliminary Reading of the 3rd Quarter Gross Domestic Product (GDP) - the GDP is considered to be the benchmark measurement of economic growth because it is the sum of all goods and services produced in the U.S. As such, the report is likely to have a major impact on the financial and mortgage markets. Analysts predict the report will show a 3.0% increase in the GDP, much higher than the 0.7% decrease the following month. A larger than expected increase in the GDP most likely will lead to higher mortgage interest rates as prices of mortgage backed securities fall.
  
  
• Jobless Claims - New claims for unemployment are tabulated each week to show the number of individuals who filed for unemployment insurance for the first time. Analysts are predicting that 525,000 new claims for unemployment will have been filed last week. With a decreasing trend in the filing of new claims for unemployment, this suggests that the labor market is improving. However, this data is usually not considered to be very important to the mortgage market.
  
  
• Fed's MBS Purchase Program - The results of this week's purchases of mortgage backed securities by the Feds will be released in the afternoon. As of last Thursday, the Feds have purchased over $959 billion in mortgage backed securities this year. The Feds plan on purchasing up to $1.25 trillion in mortgage backed securities through March 31st.

Friday, October 30th:

• 3rd Quarter Employment Cost Index (ECI) - this index tracks employer costs for salaries and benefits. It is expected to show an increase in costs of 0.5%. A larger than expected increase in the ECI will raise concerns about wage inflation and most likely will lead to higher mortgage interest rates as prices of mortgage backed securities fall.
  
  
• Personal Income and Outlays Report for September - this index is also watched closely because consumer spending makes up two-thirds of the U.S. economy. This data gives us an indication of the consumer's ability to spend and as well as their current spending habits. A rising income indicates that consumers have more money to spend and makes economic growth more of a possibility. Analysts are expecting to see no change in income, and a 0.5% decline in outlays. If the index comes in as or worse than expected, most likely we'll see lower mortgage interest rates as prices of mortgage backed securities rise.
  
  
• Update to University of Michigan's Index of Consumer Sentiment - analysts expect the index to rise slightly to 70.0, up this month's preliminary reading of 69.4. This index is moderately important because consumer sentiment is directly related to the strength of consumer spending. Because consumer spending makes up two-thirds of the U.S. economy, any related data will have an impact on the mortgage market.

How do Economic Data Releases Affect Mortgage Interest Rates?

One of the most important things for you to know when deciding when to lock in the interest rate on your mortgage is knowing what economic data is going to be released - and when - and how it may impact the mortgage market and mortgage interest rates.

While an in depth review of an economic event can help you make an informed decision, understanding the nuances of a release can't help you if you don't know when it's happening. Economic data releases are important because they provide a snapshot of what's happening in the economy. They also provide a foreshadowing of any upcoming market volatility. It's just as important to know when these data releases are happening as knowing what effect these releases can have on the mortgage market.

The chart below shows the price trend of the FNMA 30-Year 4.5% coupon over the past 30 days:

Recent Activity in Mortgage Backed Securities:

Remember - as the prices of mortgage backed securities goes down, the yields go up - and so do mortgage interest rates. Conversely, as the prices of mortgage backed securities goes up, the yields come down - and mortgage interest rates come down with it.

Mortgage Interest Rate Outlook:

Moderate to High Volatility. Overall, most likely it will be an active - and volatile - week for the mortgage market and mortgage interest rates. While Monday may be the quietest day of the week, expect some volatility in mortgage interest rates the rest of the week. The most volatile day of the week most likely will be Thursday with the release of the preliminary 3rd Quarter GDP and the results of the 7-Year Note auction.

The corporate earnings reports can also have an impact on the mortgage market and mortgage interest rates every day this week. If we see a significant rally or sell-off in the stock markets on any particular day, it may end up bringing us the biggest single day change in mortgage pricing.

There is strong evidence that the worst of the economic recession is behind us. If you have not yet locked in your mortgage interest rate, please proceed with caution and maintain contact with your mortgage professional.

The Mortgage Interest Rate Lock Advisory for Quincy MA for October 22, 2009

Here are some of the events affecting mortgage interest rates today in Quincy, Massachusetts.

What the Mortgage Backed Securities Market is Doing Today:

The price of the FNMA 30-Year 4.5% MBS coupon opened at 100.59 this morning - down 13/32 from yesterday's close.

The chart below shows today's price trend of the FNMA 30-Year 4.5% coupon:

The FNMA 30-Year 4.5% MBS coupon is currently trading at 100.63 - up 3/32 from its opening. Remember, on mortgage backed securities (MBSs), as the price goes down, the yield goes up - and so do mortgage interest rates. I expect that mortgage interest rates will be 0.125% - 0.25% worse in price this morning as compared to yesterday.

The chart below shows the price trend of the FNMA 30-Year 4.5% coupon over the past 30 days:

Economic Reports, News, and Events Affecting Mortgage Interest Rates Today:

• Existing Home Sales for September - existing home sales was up 9.4% at an annualized rate of 5.57 million in September, more than expected and the largest rise in more than 2 years, and is up from the 5.10 million annualized rate in August. This increase is ahead of the expiration of the first-time homebuyer tax credit at the end of next month. The inventory of existing home for sale fell to 7.8 months, down from 9.3 months the previous month. However, prices of homes continue to fall. Prices are down 1.4% in September, and are down at an annualized rate of 8.5%. This report gives us an indication of housing sector strength and mortgage credit demand by tracking home resales. However, this report usually doesn't have much of an impact on the mortgage market.

Watch this video from MSNBC to learn more about the housing market:

In other news, the Treasury Dept. announced yesterday the auction of $44 billion in 2-Year Notes, $41 billion of 5-Year Notes, and $31 billion of 7-yr notes next week.

There are a number of important economic reports scheduled for release next week. Look for more information on Monday.

What's Happening With Mortgage Interest Rates Today:

Moderate volatility. Overall, expect the mortgage market to be heavily influenced mostly by the stock markets today.

My Mortgage Interest Rate Lock Advice for Today:

If I were considering financing/refinancing a home, I would...

• Lock if my closing was taking place within the next 7 days
• Lock if my closing was taking place between 8 and 30 days
• Float if my closing was taking place between 31 and 45 days
• Float if my closing was taking place between 46 and 60 days

This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of any or all other borrowers.

Get today's mortgage interest rates for your situation in Quincy, MA.

The home loan and real estate markets we are currently slogging through are unprecedented in their severity. The last time something similar happened was so long ago that few are still here to remember it. As a result millions of people are unable to make their home loan payments and subsequently will have their credit damaged. Three basic events can lead to that.

In short sale the mortgage lender agrees to let the homeowner sell the property for less than the underlying loan balance. Deed in lieu means that the borrower gives the deed, or keys, to the home loan provider before it starts foreclosure action. And then there is the foreclosure itself. All three will slam the homeowner's credit generally up to seven years. By how much depends largely on how many other accounts are in distress.

These guidelines evolved gradually during "normal" housing market conditions. At times when there weren't millions of borrowers in trouble with their mortgage payments. But today things are different. The real estate scene is uniquely clobbered, bringing along with it a historic price adjustment, too. One that was actually badly needed to better reflect a sustainable value structure.

What FICO, the most widely used credit standard, does is use its computer model to predict future borrower behavior, in other words assess risk. FICO score, say, eight years ago was able to lay out a rather representative picture of a mortgage borrower. But from about 2007 onward a totally new class of a credit applicant was introduced to be rated. An unusually large segment of today's homeowners who in some shape have defaulted, or will default, on their mortgage have had a decent to excellent credit rating up until this meltdown. Keeping that in mind, their current FICO score would not be as accurate a predictor employing the standard model. Once the economy improves and most of them will obviously recover financially and become good credit risks once again, they'd still be carrying for years dings to their credit.

Las Vegas valley - with localities like Mountains Edge, Summerlin, Henderson, Southern Highlands, Anthem, North Las Vegas and Green Valley - has its share of homeowners who fall under this category. Real estate upturn here in Southern Nevada - and throughout the nation - will be undeniably delayed because many home loan applicants just can't get approved due to FICO's slow update policy. But there is hope.

The mortgage industry still has those with the spirit of entrepreneurship. Some scattered portfolio lenders are already underwriting mortgages for borrowers with recent foreclosure on their record. They keep the loans in their own books since Fannie Mae and Freddie Mac won't touch them. And it's foreseeable that more will start doing that as they realize what untapped market it is.

The Mortgage Interest Rate Lock Advisory for Merrimack NH for October 22, 2009

Here are some of the events affecting mortgage interest rates today in Merrimack, New Hampshire.

What the Mortgage Backed Securities Market is Doing Today:

The price of the FNMA 30-Year 4.5% MBS coupon opened at 100.66 this morning - down 7/32 from yesterday's close ahead of the announcement of next week's Note auctions.

The chart below shows today's price trend of the FNMA 30-Year 4.5% coupon:

The FNMA 30-Year 4.5% MBS coupon is currently trading at 100.75 - up 3/32 from its opening. Remember, on mortgage backed securities (MBSs), as the price goes down, the yield goes up - and so do mortgage interest rates. I expect that mortgage interest rates will be 0.125% - 0.25% worse in price this morning as compared to yesterday, but may improve this afternoon.

The chart below shows the price trend of the FNMA 30-Year 4.5% coupon over the past 30 days:

Economic Reports, News, and Events Affecting Mortgage Interest Rates Today:

• Leading Economic Indicators (LEI) for September - the index increased 1.0% in September - the sixth monthly gain in a row - in what the report says is "consistent with developing recovery." Analysts expected to see a 0.9% increase. This indicates that the economy is recovering and economic activity is likely to increase. While this would have a negative impact on the mortgage market as it would fuel concerns about inflation, it appears to not have much of an impact on mortgage interest rates today.
  
  
• Jobless Claims - 531,000 new claims for unemployment were filed last week, substantially more than the 519,000 analysts were predicting. The 4-week average is slightly more than a month ago - it now stands at 532,250. Continuing claims fell by 90,000 to 5.923 million. However, it's difficult to determine whether the decline can be attributed to new hires or to the expiration of benefits. Generally, this data is usually not considered to be very important to the mortgage market.
  
  
• Fed's MBS Purchase Program - The results of this week's purchases of mortgage backed securities by the Feds will be released in the afternoon. As of last Thursday, the Feds have purchased over $941 billion in mortgage backed securities this year. The Feds plan on purchasing up to $1.25 trillion in mortgage backed securities through March 31st.

Watch this video to learn more about why the economy is still fragile:

In other news, according to the Federal Housing Finance Agency (FHFA), home prices fell 0.3% in August, and follows a 0.3% increase in July. On a year-on-year basis, the index fell 3.6% in August, compared to a 4.2% decline in July.

The Beige Book was released yesterday. The Fed reported that while the economy is showing signs of stabilizing and is beginning to improve, inflation is not a concern at this time. While the housing market and manufacturing activity is improving, commercial real estate remains a big concern. They added that the labor market is still weak, and demand for bank loans is still weak and declining.

At 11:00 am today, the Treasury Dept. will announce the amounts for next week's 2-Year, 5-Year and 7-Year Note auctions. As before, these auctions are having an impact on mortgage interest rates.

There are a number of quarterly earnings reports scheduled for release this week that could affect the stock markets. If the earnings reports are good or better than expected, then you can expect traders to sell bonds and mortgage backed securities and move those funds into stocks. If, on the other hands, earnings reports are worse than expected, then you can expect traders to sell stocks and move those funds into bonds as a safe-haven.

What's Happening With Mortgage Interest Rates Today:

Moderate volatility. Overall, expect the mortgage market to be heavily influenced mostly by the stock markets today.

My Mortgage Interest Rate Lock Advice for Today:

If I were considering financing/refinancing a home, I would...

• Lock if my closing was taking place within the next 7 days
• Lock if my closing was taking place between 8 and 30 days
• Float if my closing was taking place between 31 and 45 days
• Float if my closing was taking place between 46 and 60 days

This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of any or all other borrowers.

Get today's mortgage interest rates for your situation in Merrimack, NH.