Mortgage Rates on July 2, 2010 - Improving, or...?

Mortgage Rates on July 2, 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 101.34 this morning - the same as yesterday's close.
  
  
• At 9:30 AM, the 4.0% MBS coupon was trading at 101.19 - down 5/32 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 0.250 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 6-2-2010 to 7-2-2010:

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

• Employment Situation Report - according to the Bureau of Labor Statistics, as expected, non-farm payroll fell by 125,000 jobs in June after increasing by 430,000 in May. This follows a gain of 313,000 jobs in April, and a gain of 208,000 jobs in March. The unemployment rate decreased to 9.5%. The private labor market continues to grow, but is showing signs of slowing. This is raising concerns that the economic recovery is stalling. This data had a positive impact on the mortgage market this morning as prices of mortgage backed securities rose on the news. This initially lead to lower mortgage rates this morning.
  
  
• Factory Orders - fell 1.4% in May, worse than the 0.5% decline that was expected, and follows a 1.2% rise in April. While down, this report also 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.

Trend in Mortgage Rates:

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

Mortgage Rate Lock Advice:

Mortgage rates are at historic lows - they have not been this low since 1953 - and could possibly go even lower as the global economic crisis continues. However, the US is continuing on its deficit spending spree, and is adding to its massive debt. This is causing consternation among the other members of the G8. As such, I would not risk the chance waiting for lower mortgage rates.

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.