Mortgage Rate Forecast for September 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 103.25 this morning - the same as yesterday's close.
- At 9:30 AM, the 4.0% MBS coupon was trading at 103.13 - down 4/32 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 8-3-2010 to 9-2-2010:
Economic Reports, News, and Events Affecting Mortgage Rates Today:
- Jobless Claims - 472,000 new claims for unemployment were filed last week, about as expected, and 6,000 less than the revised 478,000 claims filed the previous week. The four-week average for unemployment fell by 2,500 to 485,500 while continuing claims for the week of August 21 fell by 32,000 to 4.456 million. This report shows that employers are still cutting jobs as the economic recovery slows, and some who have been unemployed for a while have exhausted their benefits. This report had no impact on the mortgage market or mortgage rates this morning.
- Non-farm Productivity and Cost Index - for the 2nd quarter of 2010 fell 1.8% as expected, and follows a revised 3.9% increase in the 1st quarter of 2010. However, labor costs rose 1.1%, and there was a 3.5% increase in hours worked. Year-over-year, productivity is up 3.7%. This shows that with the increase in hours worked and an increase in productivity that employers may soon begin hiring. The report led to higher stock prices this morning which led to higher costs for mortgage rates this morning as investors pulled funds out of the bond markets into the stock markets.
- Factory Orders - rose 0.1% in July, less than the 0.3% increase that was expected, and follows a 0.6% decline in June and a 1.8% decline in May. This report also shows that, overall, the manufacturing sector is still weak. 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.
- Pending Home Sales Index Report - revealed that pending home sales rose 5.2% in July, and follows two months of declines. Released by the National Association of Realtors, the pending home sales index is a leading indicator of existing home sales, not new home sales. A pending sale is one in which a contract to purchase a home was signed, but has not yet made settlement. This report had a positive impact on the mortgage market and led to improved pricing for mortgage rates this morning.
In other news, the Treasury Dept will announce later this morning the terms of the Notes and Bond auctions scheduled for next week. The Notes and Bonds are used to finance the massive government debt, and the results of these auctions could affect mortgage rates next week.
Trend in Mortgage Rates:
The chart below shows the trend in mortgage rates over the past 15 years:
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!