Mortgage Rate Forecast for Massachusetts for April 23, 2010
Here are some of the events affecting mortgage rates today in Massachusetts:
What Mortgage Backed Securities Are Doing Today:
- The price of the FNMA 30-Year 4.5% MBS coupon opened at 100.22 this morning - the same as yesterday's close.
- At 9:30 AM, the 4.5% MBS coupon was trading at 100.00 - down 8/32 from its opening.
Price Trend in Mortgage Backed Securities:
The chart below shows the price trend of the FNMA 30-Year 4.5% coupon over the past 30 days from 3-24-2010 to 4-23-2010:
Remember, on mortgage backed securities (MBSs), as the price goes down, the yield goes up - and so do mortgage rates. I expect that mortgage rates will be up to 0.50 points worse in price this morning as compared to yesterday.
Economic Reports, News, and Events Affecting Mortgage Interest Rates in Massachusetts Today:
- Durable Goods Orders Report - there was a 1.3% decline in new durable goods orders in March, and is much less than the 0.4% increase that was expected. This follows a revised 1.1% increase in February and a 3.0% increase in January. However, when the transportation component is excluded, new durable goods orders increased 2.8% which follows a 0.9% incrase in February. Year-on-year, overall new orders for durable goods are up 11.9% from March 2009. When transportation is excluded, new durable goods orders are up 13.5% from the same time last year. While weakened somewhat, this report shows that the manufacturing sector is still gaining some momentum. This report led to higher mortgage rates this morning.
- New Home Sales - rose 26.9% in March to an annualized rate of 411,000 homes - much more than expected. Analysts were expecting a 1.9% increase. In addition, the inventory of new homes on the market dropped to 6.7 month supply. However, the average price of new homes fell 11.1% to $258,600. It's clear that the extended home buyer tax credit is now helping. As such, we may see a decrease in new home sales after the homebuyer tax credit expires. While fairly significant, this data did not have much of an impact on the mortgage market this morning.
In other news, yesterday the Treasury Dept announced next week's Notes and Bonds auction schedule. The announcement alone caused mortgage rates to move higher yesterday afternoon.
The Treasury Dept will be auctioning a total of $118 billion in 2-Year, 5-Year, and 7-Year Notes, and $11 billion in 5 year TIPS Notes next week. The Notes and Bonds are used to finance the massive government debt. If there is a strong demand for the Notes, we should see the bond and mortgage markets market move higher during afternoon trading which in turn lead to lower mortgage rates. However, a lackluster interest from buyers, particularly international investors, would indicate a waning appetite for longer-term U.S. securities and lead to broader selling in the bond and mortgage markets. The results of these auctions could result in higher mortgage rates next week.
Overnight, stocks futures rose as George Papandreou, the Prime Minister of Greece, asked the European Union (EU) and the International Monetary Fund (IMF) to active a $60 billion rescue package to help it shore up short-term funding needs. This helped fuel a further increase in mortgage rates this morning as investors pulled out of the bond and mortgage backed securities markets.
What's Happening With Mortgage Interest Rates in Massachusetts Today:
Moderate to High Volatility. Mortgage rates are off their historic lows, and while they rose significantly a couple of weeks ago, they have since come back down a bit. But this may be temporary.
The overall economy is improving without any increase in jobs. The Fed has also ended their purchases of mortgage backed securities. In addition, the federal deficit continues to grow while demand for US debt is waning. We're also entering the prime home selling and buying season. Historically, mortgage rates rise and fall with the thermometer. Usually from this time of the year and into the summer months, as the weather warms, mortgage rates rise.
As such, there's little or no potential for lower mortgage rates anytime soon. If you're happy with the interest rate being offered to you today and if you don't want to risk mortgage rates moving higher, then you should apply and lock in now. It's better to have locked when you should have floated than it is to float when you should have locked.
If I were applying for a mortgage today, I would lock in my rate. However, if I were to continue floating my rate, I would proceed with caution and maintain contact with my mortgage professional. I would be ready to lock in at a moment's notice as mortgage rates can continue to change for the worse.
Be sure to check out today's Massachusetts mortgage rates.
East Bridgewater, MA 02333
Lew Corcoran, ASP®, IAHSP, IAHSP-CB