Rate Forecast for June 17, 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 102.58 this morning - the same as yesterday's close.
- At 9:30 AM, the 4.5% MBS coupon was trading at 102.66 - 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 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 5-18-2010 to 6-17-2010:
Economic Reports, News, and Events Affecting Mortgage Interest Rates Today:
- Jobless Claims - 472,000 new claims for unemployment were filed last week, and 22,000 more than expected, and 12,000 more than the upwardly adjusted 460,000 claims filed the previous week. The four-week average for unemployment is holding fairly steady at 463,500. Continuing claims for the week of June 5 rose by 88,000 to 4.471 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. However, this report led to lower mortgage rates this morning.
- Consumer Price Index (CPI) - as expected, the overall price index fell by 0.2% in May - mostly because of lower gasoline prices. The core data which excludes the more volatile food and energy prices rose 0.1% as expected. 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.
- Leading Economic Indicators (LEI) - rose 0.4% in May, and is a little worse than the expected 0.6% rise. This follows a 0.1% decline in April and a 1.4% increase in March. This Conference Board report attempts to predict economic activity over the next three to six months. This report indicates that economic activity is improving, but the overall outlook is still uncertain. This report had no impact on the mortgage market or mortgage rates this morning.
In other news, 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:
Mortgage rates are again off their lows of the year. On yesterday, the price of the FNMA 30-Year 4.5% Coupon closed at 102.56, 47 basis points lower than it's all-time high of 103.03. After the open this morning, the MBS coupon rose in price, and is now within 37 basis points of its all-time high. As a comparison, what that means is this: if a 30 year fixed mortgage rate was 4.75% with 0.375 point yesterday, and if price of the MBS 4.5% coupon were to go as high as 103.03, then the best the 30 year fixed mortgage rate would be is 4.75% with no points today.
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 as fears of debt defaults in Europe are lessening. So, 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