Mortgage Rate Forecast for May 6, 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 101.09 this morning - down 2/32 from yesterday's close.
- At 9:30 AM, the 4.5% MBS coupon was trading at 101.12 - up 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 4.5% coupon over the past 30 days from 4-6-2010 to 5-6-2010:
Economic Reports, News, and Events Affecting Mortgage Interest Rates Today:
- Jobless Claims - remained fairly steady just below the 450,000 mark. 444,000 new claims for unemployment were filed last week, the lowest level in 5 weeks. This is 1,000 less than expected, and 4,000 less than the previous week. The four-week average for unemployment is up by 4,750 to 458,500. Continuing claims for the week of April 24 fell by 59,000 to 4.594 million. All signs indicate the economy has been recovering of late, and that companies are now laying off fewer workers. This data is usually not considered to be very important to the mortgage market and had no effect on mortgage rates this morning.
- Non-farm Productivity and Cost Index - is up 3.6% for the 1st quarter of 2010, and follows a 6.9% increase in the 4th quarter of 2009. Labor costs fell 1.6%, which follows a 5.9% drop the previous quarter. This shows that companies are slowly bringing people back to work. However, the report had no impact on the mortgage market or mortgage rates this morning.
Watch Jeff Joerres, Chairman and Chief Executive of Manpower Inc., talk about the prospects for U.S. job market in this video from DowJones:
In other news, investors continue to withdraw from the stock market and seek safer investments in US Treasuries and mortgage backed securities as the economic crisis in Greece continues. The Euro also continues to decline in value against the US dollar. This is helping to keep mortgage rates down today.
What's Happening With Mortgage Interest Rates Today:
Moderate to High Volatility. Mortgage rates are at their lows for 2010. While they rose significantly a several weeks ago when the Feds ended their MBS purchase program, 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 Bottom Line:
Mortgage rates continue to fall as the economic crisis in Europe worsens. While mortgage rates are at their lows for 2010, there's no telling how low mortgage rates will go or how long this will last. 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.
If I were applying for a mortgage today, I would float the rate as mortgage rates may continue to fall. I would also keep in mind that mortgage rates are already at their lows for 2010 and that they are probably as low as they're going to go. I would therefore 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.
Be sure to check out today's mortgage rates.