Trend and Forecast in Mortgage Rates on July 14, 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 100.94 this morning - down 11/32 from yesterday's close.
- At 9:30 AM, the 4.0% MBS coupon was trading at 101.16 - up 8/32 from its opening.
Remember, on mortgage backed securities (MBSs), as the price goes up, the yield comes down - and so do mortgage rates. I expect that mortgage rates will be up to 0.250 points better in price this morning as compared to Friday.
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 6-14-2010 to 7-14-2010:
Economic Reports, News, and Events Affecting Mortgage Interest Rates Today:
- Retail Sales Report - Consumers are still spending. Retail sales fell 0.5% in June, more than expected, but better than the 1.1% decline in May. When auto sales are excluded, retail sales fell only 0.1%. When auto and gasoline sales are excluded, retail sales actually rose 0.1%. However, retail sales are still up 4.8% from this same time last year. The retail sales report measures consumer spending by tracking sales at retail establishments. This is one of the more important reports we see each month because consumer spending makes up two-thirds of the economy. The retail sales report had a positive effect on mortgage rates this morning.
In other news, the Treasury Dept. will be auctioning $13 billion in 30-Year bonds today. The Notes are used to finance the massive government debt. If there is a strong demand for the Notes, 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 3 years:
Mortgage Rate Lock Advice:
Mortgage rates are at their historic lows - and haven't been this low since the early 1950s. They could possibly go even lower as the global economic crisis continues. However, the stock market is over sold while the bond market is over bought, and rates could begin to head up soon as the markets begin to correct themselves. As such, I would not risk the chance waiting for lower mortgage rates.
If I were financing a home or refinancing a mortgage today, I would:
- Lock if my closing was taking place within 7 days
- Lock if my closing was taking place between 8 and 15 days
- Lock if my closing was taking place between 16 and 30 days
- Float if my closing was taking place more than 30 days from now
Be sure to check out today's mortgage rates.
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Still a great time to buy with these rates!!! Unbelievable!! Now to get more buyers out there buying!!!
Lew,
The 5/1 ARM is really widening the gap lower from 30-year fixed now, making it a very attractive option for those whose time frame fits the parameters.
Jennifer - Mortgage rates have not been this low since the early 1950s! Unfortuantely, buyers aren't buying because of either credit issues or lack or employment. People need to go back to work so they can afford to buy a home!
Esko - The 5/1 ARM mortgage rate really is unbelievably low! If a buyer knows he or she won't stay in the house for more than 5 years, it certainly is a vrey attractive option!