Professional Home Staging and Photography Blog: The Daily Mortgage Interest Rate Lock Advisory - June 26, 2009

The Daily Mortgage Interest Rate Lock Advisory - June 26, 2009

What the Mortgage Backed Securities Market is Doing Today:

The FNMA 30 Year 5.0% Coupon opened this morning up 2/32 from yesterday's close to 101.98 before falling on better than expected economic reports.

The price of the FNMA 30-Year 5.0% coupon closed up 20/32 from its opening yesterday to 101.92 (as shown by the white line). The MBS was down as much as 6/32 this morning, but is currently trading up 2/32 to 101.97 (as shown by the blue line). 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 rates will be 0.125% - 0.25% worse in price today as compared to yesterday's close, but might improve in this afternoon's trading.

Economic Reports Being Released Today:

  • Personal Income and Outlays for Report May - This report provides an indication of the consumer's ability to spend as well as their current spending activity. The report revealed a 1.4% increase in income and a 0.3% increase in spending. Analysts were expecting to see an increase of 0.4% in income and a 0.3% rise in the spending portion of the report. The income portion of the report came in much larger than expected while the spending portion came in about as expected. However, the increase is due primarily to less taxes withheld from payrolls and higher limits on unemployment. This report had a slight negative impact on mortgage backed securities (falling prices and rising rates).

  • University of Michigan's Index of Consumer Sentiment for May - The index revealed a reading of 70.8, and was expected to provide a reading of 69.7. The reading is up from 69.0 the previous month. This indicates that consumers were more optimistic about their own financial situations than earlier thought. That also had a negative impact on bonds because rising sentiment usually means consumers are more apt to make large purchases in the near future which will increase economic activity and could potentially lead to inflation.

Important News of the Day:

Demand for $27 billion in the 7-Year note came in strong yesterday which helped boost bond prices during the afternoon trading hours. It also helped ease some concerns about the supply of debt being sold by the Fed.

Next week could be yet another active week for the markets that may influence mortgage pricing. There are several reports due out between Tuesday and Thursday next week, with one of them being the monthly Employment report. Look for more details on this week's economic data releases and events on my Weekly Mortgage Market Watch at

What Happening With Mortgage Rates Today:

High Volatility. Overall, the busiest days of the week are behind us, but the volatility is not over for bonds and mortgage rates. The market is ripe for profit takers, and there is a pretty good possibility of seeing mortgage rates changing this afternoon. So please proceed cautiously if you're still floating an interest rate and maintain contact with your mortgage professional.

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


East Bridgewater, MA 02333
Phone: (508) 443-1332

Lew Corcoran, ASP®, IAHSP, IAHSP-CB
Accredited Home Staging Professional
Professional Real Estate Photographer

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Comment balloon 0 commentsLew Corcoran, ASP® • June 26 2009 11:11AM


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