What the Mortgage Backed Securities Market is Doing Today:
The FNMA 5.0 Coupon opened down 5/32 from yesterday's close to 101.39 on better than expected jobless claims and leading economic indicator reports.
The price of the FNMA 30-Year 5.0 coupon closed down 6/32 (as shown by the white line) from its opening yesterday to 101.48, and is currently down another 11/32 (as shown by the blue line) to 101.14. Remember, mortgage backed securities (MBSs), as the price goes down, the yield goes up - and so do mortgage interest rates. I expect that mortgage rates will be more costly by 0.375 - 0.5 in discount points today as compared to yesterday.
Economic Reports Being Released Today:
- Leading Economic Indicators (LEI) for May - The Conference Board reported a 1.2% increase, which exceed forecasts, and reveals a potential for rising levels of economic activity in the next 3 - 6 months. This is considered bad news for bond prices - bond prices will drop and yields and mortgage rates will edge higher.
- Jobless Claims - 608,000 new claims were filed for unemployment last week, and is slightly less than expected. This marks the 20th consecutive week claims for unemployment were above the 600,000 mark. Continuing claims for unemployment dropped for this first time this year by 148,000 to 6.687 million. However, this data is not considered to be of high importance to the bond or the mortgage backed securities markets.
- Fed's MBS Purchase Program - The results of this week's purchases of mortgage backed securities (MBSs) by the Feds will be released in the afternoon. As of last Thursday, the Feds have purchased over $556 billion in MBSs. The Feds plan on purchasing up to $1.25 trillion in MBSs through December 31st.
Important News of the Day:
The continuing rally in the MBS market fizzled yesterday afternoon as profit takers stepped in. In addition, a weakening dollar that makes U.S. securities less valuable to international investors. In addition, there are no important economic data scheduled for release for the remainder of the week, and traders will be readying for the government auctions of T-bills, bonds and notes next week.
Look for more details on this week's economic data releases and events on my Weekly Mortgage Market Watch.
What Happening With Mortgage Rates Today:
High Volatility. Overall, the busiest days of the week for bonds and mortgage rates are now behind us. Traders will now begin focusing on the government's auctions of T-bills, notes and bonds next week. There is a pretty good possibility of seeing mortgage rates continue to change this week, so please proceed cautiously if still floating an interest rate.
In addition, the spring and summer home buying season is upon us. Mortgage rates historically climb this time of year before peaking in July or August. If you haven't locked in a rate yet, then you may want to consider doing so. Floating is making more sense in the short term right now as the markets recover from the dramatic sell off the last couple of weeks, but the ever increasing massive government debt and fears of inflationary pressures could soon drive rates up again. So, if you like the rate that you are being offered today, then there's nothing wrong with locking in. Otherwise keep an eye on the markets and maintain contact with your mortgage professional. The markets can change at any moment.
My Interest Rate Lock Advice for Today:
If I were considering financing/refinancing a home, I would...
- Lock if my closing was taking place within 7 days
- Float if my closing was taking place within 8 and 30 days
- Float if my closing was taking place between 31 and 60 days
- Float if my closing was taking place over 60 days from now
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. See today's mortgage rates at www.LewCorcoran.com/RateSheet.
East Bridgewater, MA 02333
Lew Corcoran, ASP®, IAHSP, IAHSP-CB