Mortgage Rate Forecast for May 7, 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 101.56 this morning - the same as yesterday's close.
- At 9:30 AM, the 4.5% MBS coupon was trading at 101.50 - down 2/32 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 or more 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 4.5% coupon over the past 30 days from 4-7-2010 to 5-7-2010:
Economic Reports, News, and Events Affecting Mortgage Interest Rates Today:
- Employment Situation Report - according to the Bureau of Labor Statistics, non-farm payroll increased by 290,000 in April, much more than the 200,000 gain that was expected, and is the largest growth in jobs in 4 years. This follows a revised gain of 230,000 jobs in March, a revised gain of 39,000 jobs in February. Despite the increase in jobs, the unemployment rate increased to 9.9%. The labor market is showing notable improvement, and could help consumers regain optimism which in turn will strengthen the overall recovery. This data had a negative impact on the mortgage market this morning as prices of mortgage backed securities fell on the news. This lead to higher mortgage rates this morning.
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 and people are going back to work. However, 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 lock the rate as mortgage rates are already at their lows for 2010, and they're probably as low as they're going to go. However, if I was willing to take a chance that mortgage rates may still go even lower, I would proceed with caution and maintain contact with my mortgage professional. 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.