Mortgage Rate Forecast for August 5, 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 102.34 this morning - the same as yesterday's close.
- At 9:30 AM, the 4.0% MBS coupon was trading at 102.50 - up 5/32 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 up to 0.125 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 7-6-2010 to 8-5-2010:
Economic Reports, News, and Events Affecting Mortgage Rates Today:
- Jobless Claims - 479,000 new claims for unemployment were filed last week, 24,000 more than expected, and 19,000 more than the upwardly revised 460,000 claims filed the previous week. This is the highest level since April of this year. The four-week average for unemployment rose by 5,250 to 458,500 while continuing claims for the week of July 24 fell by 34,000 to 4.537 million. All signs indicate the economy has been recovering of late, but the jobless rate remains stubbornly high. This data is usually not considered to be very important to the mortgage market. However, this unemployment report led to improved pricing on mortgage rates this morning.
In other news, the Treasury Dept will be auctioning $38 billion in 2-Year notes, $37 billion in 5-Year notes, and $29 billion in 7-Year Notes for a total of $78 billion next week. The Notes and Bonds are used to finance the massive government debt. The results of these auctions could affect mortgage rates next week.
Trend in Mortgage Rates:
The chart below shows the trend in mortgage rates over the past 15 years:
Mortgage Rate Forecast:
Mortgage rates are at their historic lows - they haven't been this low since the early 1950s - and continue to go lower as the global economic crisis continues. However, the stock market is over sold while the bond market is over bought. Mortgage rates could head up soon as the markets begin to correct themselves. As such, I would not take too much of a chance in waiting for even lower mortgage rates.
If you're happy with the mortgage rate being offered to you today and if you don't want to risk mortgage rates moving higher, then you should apply and lock in now. It's better to have locked when you should have floated than it is to float when you should have locked.
Are you in need of a mortgage to purchase a home? Or want to refinance an existing mortgage into a lower permanent fixed rate? Or want to take cash out of the equity of your home? Or consolidate debt and reduce the monthly bills? Then be sure to request a mortgage rate quote today!
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