Mortgage Rate Forecast for June 2, 2010

Mortgage Rate Forecast for June 2, 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 102.12 this morning - the same as yesterday's close.
  
  
• At 9:30 AM, the 4.5% MBS coupon was trading at 102.12 - 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 about the same in price this morning as compared to yesterday afternoon.

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 5-3-2010 to 6-2-2010:

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

• Pending Home Sales Index Report - revealed that pending home sales were up 6.0% in April, and follows a revised 7.1% increase in March. Pending home sales is up 22.4% from a year ago. Released by the National Association of Realtors, the pending home sales index is a leading indicator of existing home sales, not new home sales. A pending sale is one in which a contract to purchase a home was signed, but has not yet made settlement. This report had no impact on the mortgage market or mortgage rates this morning.

In other news, yesterday afternoon the Justice Dept. launched both a civil and criminal probe into BP that sent oil stocks diving for cover. BP was especially hit hard as their stock fell 40%. In addition, the euro continues to fall against the US dollar. Both of these events caused the stock markets to fall late yesterday afternoon and helped bolster mortgage rates.

Trend in Mortgage Rates:

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

Mortgage Rate Lock Advice:

Mortgage rates are no longer at their lows of 2010. On yesterday, the price of the FNMA 30-Year 4.5% Coupon closed within 57 basis points of its all-time high of 102.69 which was on November 30, 2009. This morning, the MBS coupon was within 57 basis points of that all-time high. As a comparison, what that means is this: if a 30 year fixed mortgage rate was 4.875% with no points yesterday, and if price of the MBS 4.5% coupon were to go as high as 102.69, then the best the 30 year fixed mortgage rate would be is 4.75% with 0.50 point today.

Mortgage rates were already at their lows for 2010. While it's still possible that mortgage rates could go lower again with the ongoing economic crisis in Europe as well as the housing market crisis in China, it won't be by much, and 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.