Here are the events affecting mortgage interest rates in Massachusetts, Maine and New Hampshire today.
What the Mortgage Backed Securities Market is Doing Today:
The FNMA 30-Year 4.5% MBS opened down 5/32 this morning to 99.38.
The price of the FNMA 30-Year 4.5% coupon closed up 1/32 on Friday to 99.53 (as shown by the white line). MBS fell as much as 10/32 this morning to 99.22, but is currently trading up 4/32 at 99.41 (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% - 0.375% worse in price this morning as compared to Friday's close.
Economic Reports for Today:
- New Home Sales for June - The report revealed 384,000 new home sales in June - an increase of 11% over the previous month. This is a much larger than expected, and put sales at their highest level since last November, hinting that the housing sector may be stabilizing. The inventory of new homes on the markets fell from a 10.2 month supply to 8.8 months. This means it will take 8.8 months to sell the current inventory of new homes if no other new homes are put on the market. This is would generally be considered negative news for bonds (lower prices) and mortgage rates (higher rates), but today's weak opening in bonds has more to do with the amount of government debt being sold this week.
Important News of the Day:
Over $200 billion in Treasury Bills and Notes are being auctioned this week. A couple of Treasury auctions that may affect bond trading and mortgage rates: the 5-year Note sale on Wednesday, and 7-year Note sale on Thursday. The last auctions of these securities were met with strong demand from investors. This led to price increases in bonds and mortgage backed securities, and a corresponding drop in yields and mortgage rates. If the demand for the auction of this week's Notes is met with strong demand, we can expect the bond market to rally (price increases) and mortgage rates fall. However, lackluster demand could lead to bond selling which will lead to price drops and higher mortgage rates Wednesday and Thursday afternoons.
There are a number of economic reports scheduled for release this week that could have affect mortgage rates. Look for more details on this week's economic data releases and events on my Weekly Mortgage Market Watch at www.LewCorcoran.com/MyBlog.
What's Happening With Mortgage Rates Today:
Moderate to High Volatility. Overall, it may be a fairly active week in the mortgage market. With several important economic reports scheduled for release this week, we will likely see noticeable movement in mortgage rates over several days. While the preliminary GDP reading, to be released on Friday, is the most important report of the week, several of releases and scheduled events have the potential to influence mortgage rates. Therefore, it's difficult to say which day we can expect to see the most movement in rates.
If you're waiting and hoping rates will dip below 5.0% again, I want you to know that, while not impossible, it's becoming increasingly unlikely. The primary reasons are 1) the recession appears to be bottoming out; 2) the housing market, while still declining, is appearing to be stabilizing; 3) the jobless rate is slowing; and 4) corporate earnings reports show that companies are beginning to earn bigger profits. So, ask yourself this question: Will it hurt me more to lock in now and watch rates drop another eighth or a quarter point, or will it hurt me more to keep floating and watch rates turn for the worse? If you're willing to take the risk and continue watching rates, then keep a wary eye on the markets and maintain contact with your mortgage professional, because 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
- Lock 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