Mortgage Rate Forecast for June 10, 2010

Mortgage Rate Forecast for June 10, 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 103.03 this morning - the same as yesterday's close.
  
  
• At 9:30 AM, the 4.5% MBS coupon was trading at 102.75 - down 5/32 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 0.25 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 4.5% coupon over the past 30 days from 5-11-2010 to 6-10-2010:

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

• International Trade Report - the trade deficit for April came in at -$40.3 billion, slightly less than the expected -$41.0 billion deficit, and slightly more than the $40 billion trade deficit in March. The increase in the trade deficit is attributed to a decline in consumer goods. The report had no impact on the mortgage market or mortgage rates this morning.

• Jobless Claims - 456,000 new claims for unemployment were filed last week, and 8,000 more than expected, and 3,000 less than the previous week. The four-week average for unemployment is up by 4,000 to 463,000. Continuing claims for the week of May 29 fell by 225,000 to 4.462 million. All signs indicate the economy has been recovering of late but without much of an increase in jobs. 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 Treasury Dept. will be auctioning $16 billion in 30-Year Bonds 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 103.03. This morning, the MBS coupon fell in price and was down 31 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.