Mortgage Rate Forecast for May 19, 2010
Here are some of the events affecting mortgage rates today:
What Mortgage Backed Securities Are Doing Today:
- The price of the FNMA 30-Year 4.5% MBS coupon opened at 101.94 this morning - the same as yesterday's close.
- At 9:30 AM, the 4.5% MBS coupon was trading at 101.86 - down 3/32 from its opening.
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 0.125 points worse in price this morning as compared to yesterday.
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 4-19-2010 to 5-19-2010:
Economic Reports, News, and Events Affecting Mortgage Interest Rates Today:
- Consumer Price Index (CPI) - the overall index was almost flat again in April - it fell only 0.1%. It was the first decline since March 2009. For the second month in a row, there was no change in the core data which excludes the more volatile food and energy prices. This is one of the most important monthly reports that we see as it measures inflationary pressures at the consumer level of the economy. With unemployment still at high, this report shows that inflation continues to be being held in check even as the overall economy is improving. This report had no impact on the mortgage market or mortgage rates this morning.
- Minutes from the Last Federal Open Market Committee (FOMC) Meeting - this will give market participants insight into the Fed's thinking and concerns regarding inflation and monetary policy. It is one of those pieces of information that may cause a great deal of volatility in the markets - or it could be a non-factor, depending on what the minutes show. The minutes will be released at 2:00 PM ET. If there are any surprises in the FOMC minutes, especially about inflation or when the Fed may start raising key interest rates, that could cause more volatility in the markets which could affect mortgage rates in the afternoon trading hours.
In other news, the stock markets around the world are being battered. So is the euro, palladium, gold and oil. In addition, Germany banned short selling and CDS trades until the end of March 2012, and is pushing the rest of Europe to adopt the same measure. This signals a growing concern that the $960 billion European bailout package will not work. However, the euro is rallying against the dollar on speculation the European Central Bank will soon announce additional steps to halt the European debt crisis.
Trend in Mortgage Rates:
The chart below shows the trend in mortgage rates over the past year:
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Lew Corcoran, ASP®, IAHSP, IAHSP-CB