Mortgage Rate Forecast for June 29, 2010
Here are some of the events affecting mortgage rates today:
What Mortgage Backed Securities (MBS) Are Doing Today:
- The price of the FNMA 30-Year 4.0% MBS coupon opened at 101.28 this morning - the same as yesterday's close.
- At 9:30 AM, the 4.0% MBS coupon was trading at 101.28 - the same as 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 the same 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 4.0% coupon over the past 30 days from 5-30-2010 to 6-29-2010:
Economic Reports, News, and Events Affecting Mortgage Interest Rates Today:
- Consumer Confidence Index (CCI) - consumer confidence for June fell 19.6% to 52.9 - and is much worse than the 63.3 reading that was expected. The previous readings were 63.3 in May, 57.9 in April, and 52.5 in March. The weakness is attributed mostly to the massive oil spill in the Gulf of Mexico. Posted by the Conference Board, this measures consumer willingness to spend. As a comparison, a reading of 80 or better is considered a signal of economic health. Retail sales typically move in tandem with consumer optimism. Because consumer spending makes up two-thirds of the U.S. economy, any related data is watched closely by market traders and can have a significant influence on the mortgage market. If consumers are less confident in their personal financial situations, they are less likely to make large purchases. Despite the lower CCI readings, this report had no impact on mortgage rates this morning.
In other news, the S&P Case-Shiller Home Price Index rose 0.7% in April, reflecting an increase in home price as homebuyer took advantage of tax incentives. On a year-on-year basis, home prices have increased an average 4.6% nationwide. While encouraging, we do expect to see an increase in foreclosures and distressed home sales this year. That coupled with the ending of the homebuyer tax credit program at the end of this month could lead to continuing declines in home values soon.
Trend in Mortgage Rates:
The chart below shows the trend in mortgage rates over the past year:
Mortgage Rate Lock Advice:
Mortgage rates are at historic lows - they have not been this low since 1953 - and could possibly go even lower as the global economic crisis continues. However, the US is continuing on its deficit spending spree, and is adding to its massive debt. This is causing consternation among the other members of the G8. As such, I would not risk the chance waiting for lower mortgage rates.
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