Mortgage Rate Forecast for May 4, 2010

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Mortgage Rate Forecast for May 4, 2010

Here are some of the events affecting mortgage rates today:

What Mortgage Backed Securities Are Doing Today:

  • The price of the FNMA 30-Year 4.5% MBS coupon opened at 100.69 this morning - the same as yesterday's close.
  • At 9:30 AM, the 4.5% MBS coupon was trading at 100.88 - up 6/32 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 0.250 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 4.5% coupon over the past 30 days from 4-4-2010 to 5-4-2010:

The price trend of the FNMA 30-Year 4.5% coupon from 4-4-2010 to 5-4-2010

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

  • Factory Orders - rose 1.3%, much better than the 0.1% decline that was expected, and follows a revised 1.3% increase the previous month. This shows that overall, the manufacturing sector is improving. This report is similar to the Durable Goods Orders report that was released late last week, except this report includes orders for both durable and non-durable goods. Durable goods are items that are expected to last three or more years such as electronics and autos. Examples of non-durable goods are food and clothing. This report had no impact on the mortgage market or mortgage rates this morning.

  • Pending Home Sales Index Report - revealed that pending home sales were up 5.3% - better than the 5.0% increase that was expected. Pending home sales is up 21.1% 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 no impact on the mortgage market or mortgage rates this morning.

In other news, with the economic crisis in Greece, and the growing economic crisis in Italy, Ireland, Spain and Portugal as well as Hungary, Romania and the Baltic states, the Euro continues to lose value against the dollar. Foreign investors including China and London are selling stock and buying up dollar dominated US Treasuries. This is helping to drive mortgage rates lower.

What's Happening With Mortgage Interest Rates Today:

Moderate to High Volatility. Mortgage rates are just off their historic lows. While they rose significantly a few weeks ago, they have since come back down. But this may be temporary.

The overall economy is improving without any increase in jobs. In addition, the federal deficit continues to grow while demand for US debt is waning. We're also in the prime home selling and buying season. Historically, mortgage rates rise and fall with the thermometer. Usually from this time of the year and into the summer months, as the weather warms, mortgage rates rise.

Trend in Mortgage Rates:

The chart below shows the trend in mortgage rates over the past year:

The trend in mortgage rates from April 30, 2009 to April 29, 2010

The Bottom Line:

Mortgage rates continue to fall as the economic crisis in Europe worsens. But there's no telling how long this will last or how low rates will go. If I were applying for a mortgage today, I would float my rate. However, I would proceed with caution and maintain contact with my mortgage professional, and I would be ready to lock in at a moment's notice as mortgage rates can change for the worse.

If you're happy with the interest 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.

Be sure to check out today's mortgage rates.

Posted by


East Bridgewater, MA 02333
Phone: (508) 443-1332

Lew Corcoran, ASP®, IAHSP, IAHSP-CB
Accredited Home Staging Professional
Professional Real Estate Photographer

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Comments (3)

Esko Kiuru
Bethesda, MD


The 5/1 ARM rate is further separating itself from 30-year fixed, making it a worthwhile option for some mortgage borrowers.

May 04, 2010 07:59 AM
Eric Michael
Remerica Integrity, Realtors®, Northville, MI - Livonia, MI
Metro Detroit Real Estate Professional 734.564.1519

Thanks for the update.

May 04, 2010 11:19 AM
Lew Corcoran, ASP®
Scena Home Staging & Decora Photography - East Bridgewater, MA
Home Stager & Real Estate Photographer

Esko - It's a wonderful surprise to see the 5/1 ARM down around 4% - a great rate for someone who doesn't intend to stay in the home any londer than 5 years!

May 04, 2010 11:18 PM

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