What the Mortgage Backed Securities Market is Doing Today:
The FNMA 5.0 Coupon opened down 5/32 this morning from yesterday's close to 101.17 and was down as much as 8/32 before recovering after the release of after worse than expected economic data this morning.
The price of the FNMA 30-Year 5.0 coupon closed up 11/32 from its opening yesterday to 101.31 (as shown by the white line). MBS is currently trading down 1/32 to 101.28 (as shown by the blue line). 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 0.125 - 0.25 in discount points today as compared to yesterday. However, lenders may improve pricing by 0.125 - 0.25 in discount points this afternoon.
Economic Reports Being Released Today:
- Existing Home Sales Report for May - Existing home sales increased by 2.4% last month to an annualized rate of 4.77 million, but was less than expected. Analysts forecasted the report would reveal an annualized of 4.85 million. Home sales were down 3.4% last month. The median prices of homes are up by 3.8%; however, the year-to-year prices of homes are down 16.8%. This report, released by the National Association of Realtors, helps us measure the strength in the housing market as well as mortgage credit demand. The report is not expected to have much of an impact on the bond market or mortgage interest rates.
Important News of the Day:
The Feds will be auctioning $104 billion in new T-bills, notes and bonds every day week except Friday. Mortgage rates will most likely be impacted by the auctions on Wednesday and Thursdays. If they are met with a strong demand, bond prices could and mortgage rates fall during afternoon trading hours. But, if the auction are met with lackluster demand, bond prices may fall and mortgage rates will rise in afternoon trading.
The Federal Open Market Committee (FOMC) begins today and will adjourn tomorrow afternoon. It is expected that Ben Bernanke will keep the key short-term interest rates at the current level of 0% - 0.25%. However, the post meeting statement, to be released at 2:15pm on Wednesday, could create volatility in the markets.
There are a number of economic reports scheduled for release this week that may influence mortgage pricing. 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 will be Wednesday and Thursday. Traders will be focusing on the minutes of the FOMC meeting Wednesday afternoon as well as the government's auctions of T-bills, notes and bonds. 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...
- Float 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