Trend and Forecast in Mortgage Rates on July 28, 2010 - Improving, or...?
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 101.84 this morning - the same as yesterday's close.
- At 9:30 AM, the 4.0% MBS coupon was trading at 101.89 - up 2/32 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 about 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 6-28-2010 to 7-28-2010:
Economic Reports, News, and Events Affecting Mortgage Rates Today:
- Durable Goods Orders Report - there was an overall 1.0% decline in new durable goods orders in June, worse than the 1.0% rise that was expected. This follows a 0.8% decline in May, and increases in each of the previous 5 months. When the transportation component is excluded, new durable goods orders fell 0.6% which follows a 1.2% increase in June. Year-on-year, overall new orders for durable goods are up 15.9%, and follows a 15.2% increase in April. This data is usually not considered to be very important to the mortgage market and had no effect on mortgage rates this morning.
In other news, the Beige Book will be released at 2 pm this afternoon. The Beige Book is released two weeks ahead of the Federal Open Market Committee (FOMC) monetary policy meetings, and the Fed relies heavily on this data during their FOMC meetings. Look for a potential market reaction to the release of the Beige Book during afternoon trading hours.
The Treasury Dept. will be auctioning $37 billion in 5-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.
Trend in Mortgage Rates:
The chart below shows the trend in mortgage rates over the past 3 years:
Mortgage Rate Forecast:
Mortgage rates are at their historic lows - they haven't been this low since the early 1950s. They could possibly go even lower as the global economic crisis continues. However, the stock market is over sold while the bond market is over bought. It also appears that banks in Europe are not as bad off as previously thought. Mortgage rates could head up soon as the markets begin to correct themselves. As such, I would not risk the chance waiting for lower mortgage rates.
If you're happy with the mortgage rate being offered to you today and if you don't want to risk mortgage rates moving higher, then you should apply and lock in now. It's better to have locked when you should have floated than it is to float when you should have locked.
Are you in need of a mortgage to purchase a home? Or want to refinance an existing mortgage into a lower permanent fixed rate? Or want to take cash out of the equity of your home? Or consolidate debt and reduce the monthly bills? Then be sure to request a mortgage rate quote today!
East Bridgewater, MA 02333
Lew Corcoran, ASP®, IAHSP, IAHSP-CB