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The Daily Mortgage Interest Rate Lock Advisory for Massachusetts, Maine, and New Hampshire - July 31, 2009

By
Real Estate Agent with Better Living Real Estate, LLC 9152684


Here are the events affecting
mortgage rates in Massachusetts, Maine, and New Hampshire today.

What the Mortgage Backed Securities Market is Doing Today:

The FNMA 30-Year 4.5% MBS coupon opened down 2/32 this morning to 99.94 prior to the release of the Gross Domestic Product (GDP) report.


The price of the FNMA 30-Year 4.5% MBS coupon closed up 6/32 yesterday to 100.00 (as shown by the white line). MBS is currently trading up 10/32 at 100.31 (as shown by the blue line). Remember, on mortgage backed securities (MBSs), as the price goes up, the yield goes down - and mortgage interest rates go down with it. I expect that mortgage rates will be 0.125% - 0.375% better in price this morning as compared to yesterday.

Economic Reports and Events Affecting Mortgage Rates Today:

  • 2nd Quarter Gross Domestic Product (GDP) - The GDP shrank by 1.0% last quarter, more than expected. Analysts expected a 0.7% decline in the annual rate. However, the decline is at a slower pace as compared to the first quarter which saw a 5.5% decline. This is another sign that the worst recession since the Great Depression is easing. The GDP is considered to be the best indicator of economic activity, and is the single most important reading we get on a regular basis. It's the sum of all goods and services produced in the U.S., and usually has a great deal of influence on the financial markets. A larger than expected decline will likely fuel a continuing rally in the bond and mortgage backed securities markets (higher prices) and lead to lower mortgage rates.
  • 2nd Quarter Employment Cost Index (ECI) - The index came in slightly above expectations at 0.4%. Analysts were expecting to see a 0.3% increase in the 2nd quarter, and follows a 0.5% increase in the 1st quarter. The ECI measures employers' costs for wages and benefits, and is considered to be an important measurement of wage inflation. This morning's report indicates that the employment cost inflation remains low, and should also help lead to higher bond and mortgage backed securities prices and lower mortgage rates.

Important News of the Day That Could Have an Impact on Mortgage Rates:

The sale of the 7-year Note went fairly well yesterday, and was much better than the previous Note auction held earlier this week. As a result, prices of bonds and mortgage backed securities rose, and yields and mortgage interest rates fell in the afternoon trading hours.

There are a number of events and economic reports scheduled for release next week that could affect mortgage rates. Look for more details on next week's economic data releases and events on my Weekly Mortgage Market Watch at www.LewCorcoran.com/MyBlog.

What's Happening With Mortgage Rates Today:

Moderate to High Volatility. Overall, it may be a fairly active week in the mortgage market. With several important economic reports scheduled for release this week, we will likely see noticeable movement in mortgage rates over several days. While the preliminary GDP reading, to be released on Friday, is the most important report of the week, several of releases and scheduled events have the potential to influence mortgage rates. Therefore, it's difficult to say which day we can expect to see the most movement in rates.

If you're waiting and hoping the 30 year fixed mortgage rate will dip below 5.0% (at no points) again, I want you to know that, while not impossible, it's becoming increasingly unlikely. The primary reasons are 1) the recession appears to be bottoming out; 2) the housing market, while still declining, is appearing to be stabilizing; 3) the jobless rate is slowing; and 4) corporate earnings reports show that companies are beginning to earn bigger profits. So, ask yourself this question: Will it hurt me more to lock in now and watch rates drop another eighth or a quarter point, or will it hurt me more to keep floating and watch mortgage rates turn for the worse? If you're refinancing and have tired of the roller coaster ride, then I suggest you lock in now and be done with it. If you're willing to take the risk and continue watching mortgage rates, then keep a wary eye on the markets and maintain contact with your mortgage professional, because the markets can change at any moment.

My Mortgage Interest Rate Lock Advice for Today:

If I were considering financing/refinancing a home, I would...

  • Lock if my closing was taking place within 7 days
  • Lock if my closing was taking place within 8 and 30 days
  • Float if my closing was taking place between 31 and 60 days
  • Float if my closing was taking place over 60 days from now

This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of any or all other borrowers. See today's mortgage rates for Massachusetts, Maine and New Hampshire at www.LewCorcoran.com/RateSheet.

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Lew Corcoran
Licensed Massachusetts Real Estate Agent
Accredited Home Staging Professional
Professional Real Estate Photographer
FAA Licensed Drone Pilot

Director, National Board of Directors,
Real Estate Staging Association (RESA)

Better Living Real Estate, LLC
15 Wall Street, #9157
Foxborough, MA 02035
O: (888) 877-8300
D: (508) 258-9658

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