Mortgage Rate Forecast for September 28, 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 102.97 this morning - the same as yesterday's close.
- At 9:30 AM, the 4.0% MBS coupon was trading at 103.00 - up 1/32 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 about the same 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 8-29-2010 to 9-28-2010:
Economic Reports, News, and Events Affecting Mortgage Rates Today:
- Consumer Confidence Index (CCI) - consumer confidence fell to a reading of 48.5 in September, the lowest of the year, and is worse than expected. In August, the reading was 53.5. In May, the reading was at the highest of the year at 62.7. Consumer confidence is still weak given the current job market situation, and the difficulty many people are having at finding jobs. Posted by the Conference Board, this measures consumers willingness to spend. As a comparison, a reading of 80 or better is considered a signal of economic health. Retail sales typically move in tandem with consumer optimism. Because consumer spending makes up two-thirds of the U.S. economy, any related data is watched closely by market traders and can have a significant influence on the mortgage market. If consumers are less confident in their personal financial situations, they are less likely to make large purchases. Despite the lower CCI readings, this report had no impact on mortgage rates this morning.
In other news, according to the S&P Case-Shiller Home Price Index, home prices rose at an annualized rate of 3.2% in July - down from the annualized 4.2% increase in June - indicating that housing prices appear to be stabilizing. On a year-on-year basis, home prices have slowed to an average 4.0% increase nationwide. While still encouraging, we do expect to see an increase in foreclosures and distressed home sales this year. We also expect to see further declines in the prices as sales of new homes dropped in August, and the supply of homes on the market continues to increase.
The Treasury Dept will be auctioning $35 billion in 5-Year notes today. The Notes are used to finance the massive government debt. The results of these auctions could affect mortgage rates this afternoon.
Trend in Mortgage Rates:
The chart below shows the trend in mortgage rates over the past 5 years:
Mortgage Rate Forecast:
Mortgage rates are 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!