Mortgage Rate Forecast for June 16, 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 102.38 this morning - the same as yesterday's close.
- At 9:30 AM, the 4.5% MBS coupon was trading at 102.58 - 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 5-17-2010 to 6-16-2010:
Economic Reports, News, and Events Affecting Mortgage Interest Rates Today:
- Housing Starts - fell 10% in May to an annualized rate of 593,000 units, and is much worse than expected. Housing starts rose 3.9% in April and 5.0% in March after falling 5.9% in February. Permits for new constructions fell 5.9% in May and follows a 10.9% decline in April. Usually, this report has little to no impact on the mortgage market. However, this report led to lower mortgage rates this morning.
- Producer Price Index (PPI) - fell 0.1% in May, and follows a 0.1% decline in April. This means that prices paid at the producer level fell, and is keeping inflation in check. The decrease in the PPI was attributed mostly to a decrease in food and energy costs. At the core level, the PPI rose 0.2%. The core level excludes the more volatile food and energy prices. Falling prices decreases the fear of inflation and tends to have a positive impact on the mortgage market. This report also led to lower mortgage rates this morning.
- Industrial Production Report - there was a 1.2% increase in production in May, better than the 1.0% rise that was expected, and follows a 0.8% increase in April. The improvement is due primarily to an increase in manufacturing, which is up 0.9% - the same as it was in March and April. While this report has no impact on mortgage rates this morning, a continuing upward trend in manufacturing could lead to higher interest rates soon.
Trend in Mortgage Rates:
The chart below shows the trend in mortgage rates over the past year:
Mortgage Rate Lock Advice:
Mortgage rates are again off their lows of the year. On yesterday, the price of the FNMA 30-Year 4.5% Coupon closed at 102.38, 65 basis points lower than it's all-time high of 103.03. After the open this morning, the MBS coupon rose in price, and is now within 45 basis points of its all-time high. As a comparison, what that means is this: if a 30 year fixed mortgage rate was 4.75% with 0.5 point yesterday, and if price of the MBS 4.5% coupon were to go as high as 103.03, then the best the 30 year fixed mortgage rate would be is 4.75% with no points today.
While it's still possible that mortgage rates could go even lower with the ongoing economic crisis in Europe, it won't be by much as fears of debt defaults in Europe are lessening. So, I would not risk the chance waiting for it.
If I was closing within the next 5 - 7 days, I would lock in the rate.
If you are closing in more than 7 days, send me an email to get my rate lock advice.
Be sure to check out today's mortgage rates.