Mortgage Rate Forecast for May 21, 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 102.38 this morning - the same as yesterday's close.
- At 9:30 AM, the 4.5% MBS coupon was trading at 102.59 - up 7/32 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 4-21-2010 to 5-21-2010:
Economic Reports, News, and Events Affecting Mortgage Interest Rates Today:
- There are no economic reports scheduled for release today.
In other news, the lower house of parliament in Germany passed a measure that approves their share ($184 billion) of the $962 billion European bailout package. Germany's upper house, or Bundesrat, is expected to pass the measure later today. Meanwhile, global stock markets as well as the euro, gold, palladium and oil continue to decline on concerns the European debt crisis will slow global economic growth. Prices of mortgage backed securities continue to rise and mortgage rates continue to fall as investors seek safe havens in US notes and bonds.
The Treasury Dept will be auctioning $42 billion in 2-Year notes, $40 billion in 5-Year notes, and $31 billion in 7-Year Notes for a total of $113 billion next week. The Notes and Bonds are used to finance the massive government debt. 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:
Prices of mortgage backed securities are at their highs of 2010. Yesterday, the price of the FNMA 30-Year 4.5% Coupon closed within 31 basis points of its all-time high of 102.69 which was on November 30, 2009. This morning, the MBS coupon was within 7 basis points of that all-time high. As a comparison, what that means is this: if a 30 year fixed mortgage rate was 4.50% with 1 point yesterday, and if price of the MBS 4.5% coupon were to go as high as 102.69, then the best the 30 year fixed mortgage rate would be is 4.50% with 0.625 point today.
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 even 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