The Mortgage Interest Rate Lock Advisory for Scarborough ME for October 29, 2009
Here are some of the events affecting mortgage interest rates today in Scarborough, ME.
What the Mortgage Backed Securities Market is Doing Today:
The price of the FNMA 30-Year 4.5% MBS coupon opened at 101.09 this morning - down 1/32 from yesterday's close.
The chart below shows today's price trend of the FNMA 30-Year 4.5% coupon:
The FNMA 30-Year 4.5% MBS coupon is currently trading at 100.97 - down 5/32 from its opening. 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.
Recent Activity in Mortgage Backed Securities:
The chart below shows the price trend of the FNMA 30-Year 4.5% coupon over the past 30 days:
Economic Reports, News, and Events Affecting Mortgage Interest Rates Today:
- Preliminary Reading of the 3rd Quarter Gross Domestic Product (GDP) - there was a 3.5% increase in the 3rd Quarter GDP - more than expected. Analysts expected a 3.0% increase in the GDP. This is the first expansion in the economy in more than a year, but it was fueled mostly by the "Cash for Clunkers" program and the first-time homebuyers tax credit. The GDP is considered to be the benchmark measurement of economic growth because it is the sum of all goods and services produced in the U.S. The report had a major impact on the financial and mortgage markets this morning. The price of the FNMA 4.5% coupon fell sharply by 29/32 to 100.24 this morning, but quickly recovered to 101.00.
- Jobless Claims -530,000 new claims for unemployment were filed last week, 5,000 more than expected, and only 1,000 less than the new claims filed the previous week. The 4-week average fell for the 8th straight week to 526,250, the lowest since January of this year. Meanwhile, continuing claims for unemployment dropped sharply by 148,000 to 5.8 million. The overall decreasing trend in the filing of new claims for unemployment suggests that companies are laying off fewer workers. However, the large number of people who are still unemployed suggests people are having a hard time finding new jobs. This data is usually not considered to be very important to the mortgage market.
- Fed's MBS Purchase Program - The results of this week's purchases of mortgage backed securities by the Feds will be released in the afternoon. As of last Thursday, the Feds have purchased over $959 billion in mortgage backed securities this year. The Feds plan on purchasing up to $1.25 trillion in mortgage backed securities through March 31st.
In other news, $31 billion in 7-Year Notes are scheduled for auction today. If the auction is met with a strong demand, prices of mortgage backed securities may rise during afternoon trading which may in turn lead to lower mortgage interest rates. But a lackluster demand may cause investors to sell mortgage backed securities which in turn may lead to higher mortgage interest rates. There was a high demand in the auction of $41 billion in 5-Year Notes yesterday.
What's Happening With Mortgage Interest Rates Today:
Moderate to high volatility. Overall, it will be an active - and volatile - week for the mortgage market and mortgage interest rates. The most volatile day of the week will be today with the release of the preliminary 3rd Quarter GDP (as this morning already demonstrated), and the results of the 7-Year Note auction early this afternoon.
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
- Float 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.
Get today's mortgage interest rates for your situation in Scarborough, ME.
East Bridgewater, MA 02333
Lew Corcoran, ASP®, IAHSP, IAHSP-CB