The Mortgage Interest Rate Lock Advisory for August 24, 2009
Here are some of the events affecting mortgage interest rates today in Massachusetts, Maine, and New Hampshire.
What the Mortgage Backed Securities Market is Doing Today:
The price of the FNMA 30-Year 4.5% MBS coupon opened up 3/32 this morning to 99.88 before continuing the sell-off that started on Friday.
The price of the FNMA 30-Year 4.5% MBS coupon closed down 19/32 on Friday to 99.78 (as shown by the white line), and closed down 16/32 for the week. MBS is currently trading down 2/32 at 99.72 (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 interest rates will be 0.125% - 0.25% worse in price this morning as compared to yesterday.
Economic Reports Affecting Mortgage Interest Rates Today:
- There are no economic reports scheduled for release today.
News and Events That Could Affect Mortgage Interest Rates Today:
There are no economic reports or news expected to be released today. So, look for the mortgage market and mortgage interest rates to be heavily influenced by the stock markets today.
There are six relevant economic reports scheduled for release this week that could have an impact on the mortgage market. Look for more details on next week's economic data releases and events on my Weekly Mortgage Market Watch at www.LewCorcoran.com/MyBlog.
Recent Mortgage Interest Rate Activity:
The chart below shows the upward trend in the price of the FNMA 30-Year 4.5% coupon over the past two weeks:
The graph below shows the upward trend in the price of the FNMA 30-Year 4.5% coupon over the past 30 days (white line) as well as its 30 day moving average (green line):
Remember - as the prices of mortgage backed securities goes up, the yields come down - and mortgage interest rates come down with it.
What's Happening With Mortgage Interest Rates Today:
Moderate to High Volatility. Overall, look for Tuesday to be the busiest day of the week with the release of the Producer Price Index. The rest of the week will likely be influenced more by stock prices than anything else, which may be quite volatile. So, if you're floating your mortgage interest rate, please keep an eye on the markets and maintain contact with your mortgage professional.
If you're waiting and hoping the 30 year fixed mortgage interest rate will dip below 5.0% (at no points) again, I want you to know that, while not impossible, and as the past few weeks have proven, it's becoming increasingly unlikely. The apparent theme indicates the recession is over (or at least has hit bottom), and markets are reacting accordingly.
It appears that mortgage interest rates are stabilizing and are heading lower - at least for now - as investors begin to realize the recession is not yet over. However, you can expect mortgage interest rates to generally move higher in the coming weeks and months. The primary reasons are 1) the recession, while not over, appears to be bottoming out; 2) the housing market, while still declining in some areas, appears to be stabilizing; 3) the rate of job loss has stabilized and may be 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 mortgage interest rates turn for the worse?
If you're refinancing and have tired of the roller coaster ride, then I suggest you consider locking in now and being done with it. If you're willing to take the risk and continue watching mortgage interest 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 Mortgage Interest Rate Lock Advice for Today:
If I were considering financing/refinancing a home, I would...
- Lock if my closing was taking place within the next 7 days
- Lock if my closing was taking place between 8 and 30 days
- Float if my closing was taking place between 31 and 45 days
- Float if my closing was taking place between 46 and 60 days
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 interest rates for Massachusetts, Maine and New Hampshire at www.LewCorcoran.com/RateSheet.
East Bridgewater, MA 02333
Lew Corcoran, ASP®, IAHSP, IAHSP-CB