What the Mortgage Backed Securities Market is Doing Today:
The FNMA 5.0 Coupon initially opened down 1/32 from yesterday's close to 100.58 on an otherwise quiet day.
The price of the FNMA 30-Year 5.0 coupon closed down 28/32 (as shown by the white line) from its opening yesterday to 100.61, and was down as much as another 8/32 this morning. MBS is currently trading up 4/32 (as shown by the blue line) to 100.73. 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 0.25 - 0.5 in discount points today as compared to yesterday.
Economic Reports Being Released Today:
- There are no economic reports scheduled for release today.
Important News of the Day:
It's a fairly quiet day as there are no economic reports or major speeches about the economy. That means mortgage backed securities will be heavily influenced by the 10 year treasury and the stock markets today. As almost always on Fridays, prices of MBSs typically fall and yields (and mortgage rates rise) heading into the weekend.
Today is also "quadruple witching Friday." Quadruple witching Friday occurs once a quarter and marks the expiration of equity options, index options, single stock futures and index futures. It may help to avoid wild swings in trading today.
There are a number of economic data scheduled for release next week that may influence mortgage pricing. Traders are also readying for the auction of government bonds next week as well as the release of the minutes of the Federal Open Market Committee (FOMC) next Wednesday afternoon - all of which may affect bond trading and mortgage rates. Look for more details on next week's economic data releases and events on my Weekly Mortgage Market Watch on Monday.
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 today, so please proceed cautiously if you're 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