Mortgage Rate Forecast for September 9, 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 103.03 this morning - the same as yesterday's close.
- At 9:30 AM, the 4.0% MBS coupon was trading at 102.78 - down 8/32 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 0.25 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 8-10-2010 to 9-9-2010:
Economic Reports, News, and Events Affecting Mortgage Rates Today:
- Jobless Claims - 451,000 new claims for unemployment were filed last week, not nearly as bad as expected, and 27,000 less than the upwardly revised 478,000 claims filed the previous week. However, 9 states did not submit their unemployment data due to the holiday on Monday. The four-week average for unemployment fell by nearly 10,000 to 477,750 while continuing claims for the week of August 28 fell by only 2,000 to 4.478 million. This report shows that the job market is again improving, and is raising expectations for more people going back to work. This report had a negative impact on the mortgage market this morning and led to higher pricing for mortgage rates.
- International Trade Report - the trade deficit decreased in July to -$42.8 billion, much better than the expected, and better than the revised $49.8 billion trade deficit in June. The increase in the trade deficit is attributed to an increase in exports and a dip in imports. The report had no impact on the mortgage market or mortgage rates this morning.
In other news, the Treasury Dept. will be auctioning $13 billion in 30-Year Bonds today. The Bonds are used to finance the massive government debt. If there is a strong demand for the Bonds, we should see the bond market move higher (resulting in lower mortgage rates) during afternoon trading. However, a lackluster interest from buyers, particularly international investors, would indicate a waning appetite for longer-term U.S. securities and lead to a broader selling in bonds and mortgage backed securities. The selling of mortgage backed securities could result in higher mortgage rates.
Trend in Mortgage Rates:
The chart below shows the trend in mortgage rates over the past 15 years:
Mortgage Rate Forecast:
Mortgage rates are coming off their historic lows as the overall economic outlook is beginning to improve. 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!