The Trend in Mortgage Rates on July 1, 2010 - Improving, or...?

The Trend in Mortgage Rates on July 1, 2010 - Improving, or...?

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 101.25 this morning - the same as yesterday's close.
  
  
• At 9:30 AM, the 4.0% MBS coupon was trading at 101.16 - down 3/32 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 0.125 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 4.0% coupon over the past 30 days from 6-1-2010 to 7-1-2010:

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

• Jobless Claims - 472,000 new claims for unemployment were filed last week, 22,000 more than expected, and 13,000 more than the upwardly adjusted 459,000 claims filed the previous week. The four-week average for unemployment rose to 466,500. Continuing claims for the week of June 19 rose by 43,000 to 4.568 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.
  
  
• Institute for Supply Management's (ISM) Non-Manufacturing Index - growth in the non-manufacturing sector fell in May with a reading of 56.2 in the overall index, down from 60.4 in April. A reading above 50 indicates manufacturing sector expansion rather than contraction. The new orders component rose to 65.7, and remains strong. This report indicates that the economic outlook looks good as there appears to be steady growth for most of the nation's economy. However, this report had no impact on mortgage rates this morning.
  
  
• Construction Spending Report - construction spending was down 0.2% in May - and is not as bad as expected. Construction spending was up 2.7% in April. Year-to-year construction spending has declined 10.5%. This report had no impact on mortgage rates this morning.
  
  
• Pending Home Sales Index Report - revealed that pending home sales fell 30% in May, and follows a 6.0% increase in April and a 7.1% increase in March. Pending home sales is down 15.9% 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 a positive impact on the mortgage market and halted to increase in mortgage rates this morning.

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 historic lows - they have not been this low since 1953 - and could possibly go even lower as the global economic crisis continues. However, the US is continuing on its deficit spending spree, and is adding to its massive debt. This is causing consternation among the other members of the G8. As such, I would not risk the chance waiting for lower mortgage 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.