Professional Home Staging and Photography Blog: Mortgage Rate Forecast for August 27, 2010 - Improving, or...?

Mortgage Rate Forecast for August 27, 2010 - Improving, or...?

Mortgage Rate Forecast for August 27, 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 103.28 this morning - the same as yesterday's close.

  • At 10:00 AM, the 4.0% MBS coupon was trading at 103.08 - down 6/32 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 0.250 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 4.0% coupon over the past 30 days from 7-28-2010 to 8-27-2010:

The price trend of the FNMA 30-Year 4.0% coupon from 7-28-2010 to 8-27-2010

Economic Reports, News, and Events Affecting Mortgage Rates Today:

  • First Revision to the 2nd Quarter Gross Domestic Product (GDP) - the GDP in the 2nd Quarter of 2010 contracted to an annualized rate of 1.6%, but was more than the 1.3% growth rate that was expected. So far, this has been a jobless recovery, and this report confirms that economic growth is sputtering. This doesn't bode well for employment, and is raising fears that the nation's jobless rate could climb higher. The data usually does not have an impact on the mortgage market. However, this report led to higher pricing for mortgage rates this morning.

  • University of Michigan's Index of Consumer Sentiment - came in with a reading this morning of 68.9, a little worse than expected, and reflects a weak jobs market. 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 not very likely to make many purchases. The consumer sentiment report did not have an impact on the mortgage market or mortgage rates this morning.

Trend in Mortgage Rates:

The chart below shows the trend in mortgage rates over the past 20 years:

The 20 year trend in mortgage rates from August 1990 to August 2010

Mortgage Rate Forecast:

Mortgage rates are at their historic lows. They haven't been this low since the early 1950s. These low mortgage rates may be with us for some time - or they may not. Usually, mortgage rates go up during the summer months during the peak home buying season, then go down as the fall and winter seasons approach. But these are not "normal times." It's possible that mortgage rates will continue to slowly fall. However, as a few days last week have shown, they could turn at any time.

If you're thinking about refinancing your mortgage and if these low mortgage rates make sense to you, then take advantage of them while you can. 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
Phone: (508) 443-1332

Lew Corcoran, ASP®, IAHSP, IAHSP-CB
Accredited Home Staging Professional
Professional Real Estate Photographer

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Comment balloon 2 commentsLew Corcoran, ASP® • August 27 2010 11:10AM

Comments

Do you think Friday portends a change in direction for rates?

Posted by Loan Survivor Real Estate Financing Expert (Purchases, First Time Buyers, Pre-Approvals, Refinance) over 8 years ago

Drew - no, not yet. Investors liked wha tthey heard - that the Feds will do what they can to keep rates down to spur on the economy. However, the Fed funds rate is already at 0 - 0.25%. The Fed has no room left to maneuver. The jubilation will be short lived as the economy continues to slowly move along on the edge of deflation. The economy will not turn around until employers start hiring again, and that's not going to happen until the federal gov't stops spending, and cuts taxes and oppresive regulations.

Posted by Lew Corcoran, ASP®, Home Stager & Real Estate Photographer (Scena Home Staging & Decora Photography) over 8 years ago

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