Mortgage Rate Forecast for May 24, 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 102.19 this morning - the same as Friday's close.
- At 9:30 AM, the 4.5% MBS coupon was trading at 102.28 - up 3/32 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 0.125 points better in price this morning as compared to Friday.
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 4-24-2010 to 5-24-2010:
Economic Reports, News, and Events Affecting Mortgage Interest Rates Today:
- Existing Home Sales Report - released by the National Association of Realtors (NAR), this report provides us with a measurement of housing sector strength and mortgage credit demand. Existing home sales increased 7.6% in April to an annualized rate of 5.77 million homes, the highest level since December, and are up 22.8% from a year ago. First-time home buyers made up 44% of all home sales. However, the inventory of unsold homes decreased 11.5% to an 8.4 month supply which could lead to a further decrease in market values. The housing market may be stabilizing as sales prices of homes firmed up, but the homebuyer tax credit could have had an impact on the surge in home sales. While significant, this report had no impact on the mortgage market or mortgage rates this morning.
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. Friday, the price of the FNMA 30-Year 4.5% Coupon closed within 50 basis points of its all-time high of 102.69 which was on November 30, 2009. This morning, the MBS coupon was within 35 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 Friday, 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