Mortgage Rate Forecast for June 8, 2010

Mortgage Rate Forecast for June 8, 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 102.88 this morning - the same as yesterday's close.
  
  
• At 9:30 AM, the 4.5% MBS coupon was trading at 102.81 - down 2/32 from 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.

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 5-9-2010 to 6-8-2010:

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

• There are no economic reports scheduled for release today.

In other news, Ben Bernanke, Chairman of the Federal Reserve, stated in an interview forum at the Woodrow Wilson International Center for Scholars yesterday afternoon that unemployment will likely remain high for some time. He also said he could not predict when the Fed will raise interest rates as it will depend on the economy.

The Treasury Dept. will be auctioning $36 billion in 3-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 year:

Mortgage Rate Lock Advice:

Mortgage rates are at their lowest ever. Yesterday, the price of the FNMA 30-Year 4.5% Coupon closed at a new all-time high of 102.88. This morning, the MBS coupon was within 7 basis points of that all-time high. While it's still possible that mortgage rates could go even lower with the ongoing economic crisis in Europe, 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.