Here are the factors 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 99.84.
The price of the FNMA 30-Year 4.5% coupon closed up 8/32 yesterday to 99.69 (as shown by the white line). MBS is currently trading up 9/32 at 99.97 (as shown by the blue line). Remember, on mortgage backed securities (MBSs), as the price goes up, the yield goes down - and mortgage interest rates go down with it. 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:
- Durable Goods Orders for June - New orders for durable goods fell 2.5% last month - much more than expected. Analysts expected a 0.5% decline. This follows a 1.8% increase in May. Posted by the Commerce Department, this data provides an indication of manufacturing sector strength by tracking orders at U.S. factories for big-ticket items. These are products that are expected to last at least three years. This report indicates that manufacturing activity for big-ticket items is slowing, which means that an economic recovery is not likely to happen anytime soon. This should lead to higher prices for bonds and mortgage backed securities, and lower mortgage rates.
Important News of the Day:
The Federal Reserve will release its Beige Book report this afternoon. Given that Federal Reserve Chairman Ben Bernanke's testimony to Congress last week gave, I'm not expecting to see any surprises from this report.
The results of the 5-year Treasury Note auction will be released early this afternoon. If the auction is met with a strong demand, we may see bond prices continue to rise and mortgage rates continue to fall in the afternoon. However, a weak demand could lead to higher mortgage rates.
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