Rate Forecast for June 22, 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 103.03 this morning - the same as yesterday's close.
- At 9:30 AM, the 4.5% MBS coupon was trading at 103.12 - 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 5-23-2010 to 6-22-2010:
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 fell 2.2% in May to an annualized rate of 5.66 million homes - lower than expected. The inventory of unsold homes fell slightly to an 8.3 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 back in March and April. While significant, this report had no impact on the mortgage market or mortgage rates this morning.
In other news, the Treasury Dept. will be auctioning $40 billion in 2-Year Notes today. The Notes are used to finance the massive government debt. If there is a strong demand for the Notes, we should see the bond market move higher (resulting in lower mortgage rates) during afternoon trading. However, a lackluster interest from buyers, particularly international investors, would indicate a waning appetite for longer-term U.S. securities and lead to a broader selling in bonds and mortgage backed securities. The selling of mortgage backed securities could result in higher mortgage rates.
The Federal Open Market Committee (FOMC) meets today, and will adjourn tomorrow afternoon. It will likely adjourn with an announcement of no change to key short-term interest rates, but we may see some volatility in the markets following the 2:15 PM ET post-meeting statement. There appears to be more and more discussion about when the Fed will have to start raising key interest rates to prevent inflation from strengthening. If the statement gives any hint of when that may be, or there is a change in the regular canned portions of the statement, we could see a sizable change to mortgage rates Wednesday afternoon.
Trend in Mortgage Rates:
The chart below shows the trend in mortgage rates over the past year:
Mortgage Rate Lock Advice:
Mortgage rates have returned to their lows of the year. Yesterday, the price of the FNMA 30-Year 4.5% Coupon closed at 103.03, the same as its all-time high on June 9th. After the open this morning, the MBS coupon rose again in price, and is now at its new all-time high.
While it's still possible that mortgage rates could go even lower, it won't be by much. It's becoming increasingly unlikely as the European, Chinese and Japanese markets are showing signs of improvements. 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