Mortgage Rate Forecast for September 13, 2010 - Improving, or...?

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Mortgage Rate Forecast for September 13, 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 102.10 this morning - down 9/32 from Friday's close.

  • At 9:30 AM, the 4.0% MBS coupon was trading at 102.19 - up 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 as much as 0.250 points better in price this morning as compared to Friday afternoon.

The reason for the large drop in MBS prices between Friday's close and this morning's opening is Friday was roll-over day in the MBS market. Every month, the MBS coupon is closed out, and all new loans are placed into the next month's coupon for delivery.  This process occurs on the 10th of every month.  There is no effect on rate sheets or pricing from this event.

Price Trend in Mortgage Backed Securities:

The chart below shows the price trend of the FNMA 30-Year 4.0% coupon over the past 90 days from 6-14-2010 to 9-13-2010:

The price trend of the FNMA 90-Year 4.0% coupon from 6-14-2010 to 9-13-2010

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

  • There are no economic reports scheduled for release today.

Trend in Mortgage Rates:

The chart below shows the trend in mortgage rates over the past 3 years:

The 3 year trend in mortgage rates from September 2007 to September 2010

Mortgage Rate Forecast:

Mortgage rates are coming off their historic lows as the overall economic outlook is beginning to improve. The MBS 4.0% coupon is down 137 basis points from its high on August 31st (see chart). This means that a rate that was at 4.25% with no points on August 31st is now 4.375% with 0.375 point today.

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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