Mortgage Rate Forecast for September 1, 2010 - Improving, or...?

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Mortgage Rate Forecast for September 1, 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 103.56 this morning - the same as yesterday's close.

  • At 9:30 AM, the 4.0% MBS coupon was trading at 103.47 - down 3/32 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 worse in price this morning as compared to yesterday afternoon.

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 8-2-2010 to 9-1-2010:

The price trend of the FNMA 30-Year 4.0% coupon from 8-2-2010 to 9-1-2010

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

  • Institute for Supply Management's (ISM) Manufacturing Index - the manufacturing sector increased in August with a reading of 56.3 in the overall index, up from 55.5 in July. However, the new orders component fell slightly 53.1, the lowest of the year while employment increased from 58.6 to 60.4. This indicates that there is an increased in general business activity such as production, employment, and inventories. A reading above 50 indicates manufacturing sector expansion rather than contraction. Even with the slowdown in new orders, this report indicates that the economic outlook is improving. This report led to higher pricing for mortgage rates this morning.

  • Construction Spending Report - construction spending fell 1.0% in July - and is worse than expected. This follows a revised 0.8% decline in June. The plunge in home sales and the decrease in housing starts led to the decline. Year-to-year construction spending has declined 7.9%. This report had no impact on mortgage rates this morning.

In other news, the ADP Employment Report estimates that 10,000 jobs were lost in August, much worse than expected. Analysts were expecting an increase of up to 40,000 new jobs. In contrast, 42,000 private jobs were created in July. The ADP employment report provided payroll forecasts in advance of the Employment Situation report which will be released on Friday. 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 10 years:

The 10 year trend in mortgage rates from August 2000 to August 2010

Mortgage Rate Forecast:

Mortgage rates are at their historic lows. They haven't been this low since the early 1950s. These low mortgage rates may be with us for some time - or they may not. Usually, mortgage rates go up during the summer months during the peak home buying season, then go down as the fall and winter seasons approach. But these are not "normal times." It's possible that mortgage rates will continue to slowly fall. However, as the last few weeks have shown, they could turn at any time.

If you're thinking about refinancing your mortgage and if these low mortgage rates make sense to you, then take advantage of them while you can. 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!


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East Bridgewater, MA 02333
Phone: (508) 443-1332

Lew Corcoran, ASP®, IAHSP, IAHSP-CB
Accredited Home Staging Professional
Professional Real Estate Photographer

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Jenny Durling
L.A. Property Solutions - Los Angeles, CA
For Los Angeles real estate help 213-215-4758

Mortgage rates are so low right now that even a slight up tick should not deter buyers from jumping into the market.  I'm in the process of refinancing my home right now- what a difference a percentage point can make!

Sep 01, 2010 03:37 AM #1
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Gila, NM

Money is cheap right now- it just isn't easy or quick to get it.  The low rates are here for a while- at least several more months!

Sep 01, 2010 03:41 AM #2
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Lew Corcoran, ASP®

Home Stager & Real Estate Photographer
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