Mortgage Rate Forecast for August 17, 2010 - Improving, or...?
Here are some of the events affecting mortgage rates today:
What Mortgage Backed Securities (MBS) Are Doing Today:
- The price of the FNMA 30-Year 4.0% MBS coupon opened at 102.81 this morning - the same as yesterday's close.
- At 9:30 AM, the 4.0% MBS coupon was trading at 102.63 - down 6/32 from its opening.
Remember, on mortgage backed securities (MBSs), as the price goes down, the yield goes up - and so do mortgage rates. I expect that mortgage rates will be up to 0.25 points worse in price this morning as compared to yesterday.
Price Trend in Mortgage Backed Securities:
The chart below shows the price trend of the FNMA 30-Year 4.0% coupon over the past 30 days from 7-18-2010 to 8-17-2010:
Economic Reports, News, and Events Affecting Mortgage Rates Today:
- Housing Starts - rose 1.7% in July to an annualized rate of 546,000 units, an improvement, but is still worse than expected. Housing starts fell 8.7% in June and fell 14.9% in May. Permits for new constructions fell 3.1% in July and follows a 1.6% increase in June. Usually, this report has little to no impact on the mortgage market. However, this report led to lower mortgage rates this morning.
- Producer Price Index (PPI) - rose 0.2% in July, and follows a 0.5% decline in June. The increase in the PPI was attributed mostly to higher food prices. At the core level, the PPI rose 0.3%, and is higher than expected. The core level excludes the more volatile food and energy prices. Rising prices increases the fear of inflation and tends to have a negative impact on the mortgage market. This report led to an increase in the costs of mortgage rates this morning.
- Industrial Production Report - production increased 1.0% in July, and is better than expected. This follows a 0.1% decrease in June. The increase is due primarily to an increase in manufacturing, which is up 1.1%. Manufacturing continues to help the economic recovery along at a rather slow pace. This report had no impact on the mortgage market this morning.
Trend in Mortgage Rates:
The chart below shows the trend in mortgage rates over the past 5 years:
Mortgage Rate Forecast:
Mortgage rates are at their historic lows. They haven't been this low since the early 1950s - and continue to go lower as the economic recovery slows. These low mortgage rates may be with us for some time - or they may not. Usually, mortgage rates go up during the summer months during the peak home buying season, then go down as the fall and winter seasons approach. But these are not "normal times." It's possible that mortgage rates will continue to slowly fall. However, they could turn at any time - and will if future economic news shows that we're finally coming out of the recession.
If you're thinking about refinancing your mortgage and if these low mortgage rates make sense to you, then take advantage of them while you can. If you're happy with the mortgage rate being offered to you today and if you don't want to risk mortgage rates moving higher, then you should apply and lock in now. It's better to have locked when you should have floated than it is to float when you should have locked.
Are you in need of a mortgage to purchase a home? Or want to refinance an existing mortgage into a lower permanent fixed rate? Or want to take cash out of the equity of your home? Or consolidate debt and reduce the monthly bills? Then be sure to request a mortgage rate quote today!
East Bridgewater, MA 02333
Lew Corcoran, ASP®, IAHSP, IAHSP-CB