Trend and Forecast in Mortgage Rates on July 16, 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 101.72 this morning - the same as yesterday's close.
- At 9:30 AM, the 4.0% MBS coupon was trading at 101.69 - down 1/32 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 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 4.0% coupon over the past 30 days from 6-16-2010 to 7-16-2010:
Economic Reports, News, and Events Affecting Mortgage Interest Rates Today:
- Consumer Price Index (CPI) - as expected, the overall price index fell by 0.1% in June - mostly because of lower gasoline prices. The core data which excludes the more volatile food and energy prices rose 0.2% - slightly more than expected. This is one of the most important monthly reports that we see as it measures inflationary pressures at the consumer level of the economy. With unemployment still at high, this report shows that inflation continues to be held in check even as the overall economy is improving. This report had no impact on the mortgage market or mortgage rates this morning.
- University of Michigan's Index of Consumer Sentiment - came in with a reading this morning of 66.5, much worse than expected, indicating that consumer sentiment is waning. The past 3 readings were 76.0 in June, 75.5 in May, and 73.3 in April. This index measures consumer willingness to spend and can usually have enough of an impact on the financial markets to change mortgage rates. While this report indicates that consumers are not as likely to make large purchases soon, mortgage rates improved this morning as investors took money out of stocks and invested in bonds.
Trend in Mortgage Rates:
The chart below shows the trend in mortgage rates over the past 3 years:
Mortgage Rate Lock Advice:
Mortgage rates are at their historic lows - and haven't been this low since the early 1950s. They could possibly go even lower as the global economic crisis continues. However, the stock market is over sold while the bond market is over bought, and rates could begin to head up soon as the markets begin to correct themselves. As such, I would not risk the chance waiting for lower mortgage rates. That being said, rates continue to slowly fall. As such, I would float and be ready to lock at a moment's notice.
If I were financing a home or refinancing a mortgage today, I would:
- Float if my closing was taking place within 7 days
- Float if my closing was taking place between 8 and 15 days
- Float if my closing was taking place between 16 and 30 days
- Float if my closing was taking place more than 30 days from now
Be sure to check out today's mortgage rates.
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