Mortgage Rate Forecast for June 11, 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 102.06 this morning - 13/32 less than yesterday's close.
- At 9:30 AM, the 4.5% MBS coupon was trading at 102.38 - up 10/32 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 0.25 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 5-13-2010 to 6-12-2010:
Economic Reports, News, and Events Affecting Mortgage Interest Rates Today:
- Retail Sales Report - Consumers are still spending. Retail sales were fell 1.2% in May, much more than expected, and is well off the 0.6% increase in April and the 2.1% increase in March. When auto sales are excluded, retail sales fell 1.1%. When auto and gasoline sales are excluded, retail sales fell 0.8%. Spending in building materials and gardening equipment fell 9.3%. However, retail sales are still up 6.9% from this same time last year. The retail sales report measures consumer spending by tracking sales at retail establishments. This is one of the more important reports we see each month because consumer spending makes up two-thirds of the economy. The retail sales report had a positive effect on mortgage rates this morning.
- University of Michigan's Index of Consumer Sentiment - came in with a reading this morning of 75.5, better than expected, indicating that consumer sentiment is bouncing back. The past 3 readings were 73.3 in April, 69.5 in March, and 72.5 in February. This index measures consumer willingness to spend and can usually have enough of an impact on the financial markets to change mortgage rates. This report indicates that consumers are less likely to make purchases, and helped to drive down 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:
Mortgage rates are again off their lows of the year. Yesterday, the price of the FNMA 30-Year 4.5% Coupon fell 59 basis points and closed at 102.44. Yesterday was monthly rollover day for mortgage backed securities, and was down another 40 basis points on the open this morning, and was as much as 97 basis points off its high. After the open this morning, the MBS coupon rose in price, but is still down 65 basis points from the all-time high of 103.03. While it's still 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.
If I was closing within the next 5 - 7 days, I would lock in the rate.
If you are closing in more than 7 days, send me an email to get my rate lock advice.
Be sure to check out today's mortgage rates.
East Bridgewater, MA 02333
Lew Corcoran, ASP®, IAHSP, IAHSP-CB