Mortgage Rate Forecast for June 24, 2010

Mortgage Rate Forecast for June 24, 2010

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 100.75 this morning - the same as yesterday's close.
  
  
• At 9:30 AM, the 4.0% MBS coupon was trading at 100.91 - up 5/32 from its opening.

It is customary in the MBS market to track the coupon that is running closest to par, which is 100.00. Due to market improvements, we are now tracking the FNMA 4.0% coupon. 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 0.125 in points better 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 5-25-2010 to 6-24-2010:

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

• Jobless Claims - 457,000 new claims for unemployment were filed last week, 8,000 less than expected, and 19,000 less than the upwardly adjusted 466,000 claims filed the previous week. The four-week average for unemployment fell slightly to 462,750. Continuing claims for the week of June 12 fell by 45,000 to 4.548 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.
  
  
• Durable Goods Orders Report - there was a 1.1% decline in new durable goods orders in May, worse than expected, and is much less than the 3.0% increase in April. This follows increases in each of the previous 5 months. Orders for civilian aircraft fell 29.6% which is the big contributor to the decline in durable goods orders. When the transportation component is excluded, new durable goods orders actually increased 0.9% which follows a 0.8% increase in April and a 4.8% increase in March. Year-on-year, overall new orders for durable goods are up 14.9%, and follows a 19.1% increase in April. When transportation is excluded, new durable goods orders are up 17.6% from the same time last year. 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, long term interest rates are falling around the world as fears of a very slow economic recovery spread. European stocks fell today, led by indexes in Greece, Spain and Portugal.

The Treasury Dept. will be auctioning $30 billion in 7-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 continue to go lower. Yesterday, the price of the FNMA 30-Year 4.0% Coupon closed at 100.75. Bear in mind that mortgage rates are now at all-time lows. They could go even lower, but most likely it won't be by much as the European, Chinese and Japanese markets are showing signs of improvements. So, I would not risk the chance waiting for lower rates.

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.