Mortgage Rate Forecast for August 12, 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 102.75 this morning - down 3/32 from yesterday's close.
- At 9:30 AM, the 4.0% MBS coupon was trading at 102.72 - 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 7-13-2010 to 8-12-2010:
Economic Reports, News, and Events Affecting Mortgage Rates Today:
- Jobless Claims - 484,000 new claims for unemployment were filed last week, 24,000 more than expected, and 2,000 more than the upwardly revised 482,000 claims filed the previous week. This is the highest level since February of this year. The four-week average for unemployment rose by 14,250 to 473,500 while continuing claims for the week of July 31 fell by 118,000 to 4.452 million mostly due to the expiration of benefits. All signs indicate the economic recovery is slowing down, and 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 $16 billion in 30-Year Bonds today. The Notes and Bonds are used to finance the massive government debt. If there is a strong demand for the Notes, we should see the bond and mortgage markets market move higher during afternoon trading which in turn lead to lower mortgage rates. However, a lackluster interest from buyers, particularly international investors, would indicate a waning appetite for longer-term U.S. securities and lead to broader selling in the bond and mortgage markets. That in turn could lead to higher mortgage rates.
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 economic recovery slows. These low mortgage rates may be with us for some time. Usually, mortgage rates go up during the summer months during the peak home buying season, then go down as the fall and winter seasons approach. But these are not "normal times." It's possible that mortgage rates will continue to slowly fall. However, they could turn at any time - and will if future economic news shows that we're finally coming out of the recession.
If you're thinking about refinancing your mortgage and if these low mortgage rates make sense to you, then take advantage of them while you can. 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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