Mortgage Rate Forecast for May 20, 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 102.23 - up 10/32 from its opening.
Remember, on mortgage backed securities (MBSs), as the price goes up, the yield comes down - and so do mortgage rates. I expect that mortgage rates will be up to 0.250 points better 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 4-20-2010 to 5-20-2010:
Economic Reports, News, and Events Affecting Mortgage Interest Rates Today:
- Jobless Claims - are up again. 471,000 new claims for unemployment were filed last week, and 31,000 more than expected, and 25,000 more than the previous week. This is the highest in over a month, and the biggest increase since February. However, the four-week average for unemployment is down by 7,500 to 453,500. Continuing claims for the week of May 8 is down 40,000 to 4.625 million. All signs indicate the economy has been recovering of late but without much of an increase in jobs. This data is usually not considered to be very important to the mortgage market and had no effect on mortgage rates this morning.
- Leading Economic Indicators (LEI) - fell 0.1% in April, the first decline in more than a year, and is worse than expected. This follows a 1.4% increase in March and a 0.6% increase in February. This Conference Board report attempts to predict economic activity over the next three to six months. This report indicates that economic activity is not likely to rise in the near future. This report had no impact on the mortgage market or mortgage rates this morning.
In other news, the economic crisis in Europe continues as traders and investors have no confidence in the $962 billion bailout package. Global stock markets continue to decline as investors seek safe havens in US bonds, and the euro, gold, palladium and oil continue to decline as the dollar strengthens. However, keep an eye on the euro which has been attempting to rally against world currencies. While it does not appear likely, if the euro is able to extend its rally, then prices of mortgage backed securities could fall and mortgage rates could rise.
The Treasury Dept will announce later this morning the terms of the Notes and Bond auctions scheduled for next week. The Notes and Bonds are used to finance the massive government debt, and the results of these auctions could affect mortgage rates next week.
Trend in Mortgage Rates:
The chart below shows the trend in mortgage rates over the past year:
Mortgage Rate Lock Advice:
If I were applying for a mortgage today, I would lock the rate as mortgage rates are already at their lows for 2010, and they're probably as low as they're going to go. While it's possible that mortgage rates could go lower with the ongoing economic crisis in Europe, it won't be by much, and I would not risk the chance waiting for it.
Be sure to check out today's mortgage rates.
East Bridgewater, MA 02333
Lew Corcoran, ASP®, IAHSP, IAHSP-CB