Mortgage Rate Forecast for September 3, 2010 - Improving, or...?

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Mortgage Rate Forecast for September 3, 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 102.69 - down 13/32 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 0.375 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 8-4-2010 to 9-3-2010:

The price trend of the FNMA 30-Year 4.0% coupon from 8-4-2010 to 9-3-2010

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

  • Employment Situation Report - according to the Bureau of Labor Statistics, private non-farm employment rose by 67,000 jobs, and is much more than the 40,000 job gain that was expected. This follows a revised gain of 107,000 jobs in July. However, non-farm payroll fell by 54,000 jobs in August as 114,000 temporary census jobs came to an end. This is the third straight monthly job loss, but the loss is much less than the 90,000 job loss that was expected. As expected, the unemployment rate rose for the first time in 4 months to 9.6%. This report shows that the economy is not headed back into a recession. This data had a negative impact on the mortgage market this morning as prices of mortgage backed securities fell on the news. This led to higher pricing for mortgage rates this morning.

  • Institute for Supply Management's (ISM) Non-Manufacturing Index - with a reading of 51.5 in the overall index, growth in the non-manufacturing sector is slowing. The new orders component fell more than 4 points 56.7 in July to 51.5 in August - the slowest rate of month-to-month growth this year. A reading above 50 indicates manufacturing sector expansion rather than contraction. This report indicates that the economic outlook is not as good as expected as backlog orders are flat, and exports and overall business activities are down. Overall, the growth in the economy has been decelerating since May of this year. Despite the news, this report had no impact on mortgage rates this morning.

In other news, the Treasury Dept will be auctioning Notes and Bonds next week. The Notes and Bonds are used to finance the massive government debt. 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 20 years:

The 20 year trend in mortgage rates from September 1990 to September 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." Given the most recent economic and job reports, it now appears that mortgage rates are as low as they will ever go.

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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