Mortgage Rate Forecast for August 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 102.41 this morning - the same as Friday's close.
- At 9:30 AM, the 4.0% MBS coupon was trading at 102.19 - down 7/32 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 Friday.
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 7-3-2010 to 8-2-2010:
Economic Reports, News, and Events Affecting Mortgage Rates Today:
- Institute for Supply Management's (ISM) Manufacturing Index - the manufacturing sector slowed again in July with a reading of 55.5 in the overall index - down from 56.2 in June and 59.7 in May. The new orders component fell to 53.5, the lowest of the year. This indicates a slower rate of growth in manufacturing. A reading above 50 indicates manufacturing sector expansion rather than contraction. This report indicates that the economic outlook is not as robust as previously thought. This report had no impact on mortgage rates this morning.
- Construction Spending Report - construction spending rose a scant 0.1% in June - and is higher than expected - and follows a 1.0% decline in May. Year-to-year construction spending has declined 7.9%. This report had no impact on mortgage rates this morning.
Trend in Mortgage Rates:
The chart below shows the trend in mortgage rates over the past 3 years:
Mortgage Rate Forecast:
Mortgage rates are at their historic lows - they haven't been this low since the early 1950s - and continue to go lower as the global economic crisis continues. However, the stock market is over sold while the bond market is over bought. Mortgage rates could head up soon as the markets begin to correct themselves. As such, I would not take too much of a chance in waiting for even lower mortgage rates.
If you're happy with the mortgage 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.
Are you in need of a mortgage to purchase a home? Or want to refinance an existing mortgage into a lower permanent fixed rate? Or want to take cash out of the equity of your home? Or consolidate debt and reduce the monthly bills? Then be sure to request a mortgage rate quote today!
