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 up 5/32 this morning to 99.59.
The price of the FNMA 30-Year 4.5% coupon closed down 3/32 yesterday to 99.44 (as shown by the white line). MBS is currently trading up 8/32 at 99.69 (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% better in price this morning as compared to yesterday's close.
Economic Report for Today:
- Consumer Confidence Index (CCI) for July - The reading for the CCI came in at 46.6, which is lower than the 50.0 reading analysts were expecting, and is lower than June's reading of 49.3. This shows that consumer confidence is eroding, and is primarily because of the current job market. Consumers are finding it difficult to find work. Released by the Conference Board, this index measures consumer sentiment which gives us an idea of their willingness to spend. This is important because consumer spending makes up two-thirds of the U.S. economy. As the CCI reading is much weaker than expected, we saw prices of bonds and mortgage backed securities rise while mortgage rates fell this morning.
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
- 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