Mortgage Rate Forecast for August 6, 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 102.50 this morning - the same as yesterday's close.
- At 9:30 AM, the 4.0% MBS coupon was trading at 102.62 - up 4/32 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 0.125 points better in price this morning as compared to yesterday.
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 7-7-2010 to 8-6-2010:
Economic Reports, News, and Events Affecting Mortgage Rates Today:
- Employment Situation Report - according to the Bureau of Labor Statistics, non-farm payroll fell by 131,000 jobs in July; the loss is much more than expected. This follows a loss of 126,000 jobs in June, and a revised gain of 432,000 jobs in May and revised gain of 221,000 jobs in April. The unemployment rate remains at 9.5%. The private labor market is still growing, but is showing a continuous sign of slowing. This is raising concerns that the economic recovery is stalling. This data had a positive impact on the mortgage market this morning as prices of mortgage backed securities rose on the news. This initially led to lower mortgage rates this morning.
In other news, the Treasury Dept will be auctioning $38 billion in 2-Year notes, $37 billion in 5-Year notes, and $29 billion in 7-Year Notes for a total of $78 billion 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:
Mortgage Rate Forecast:
Mortgage rates are at their historic lows - they haven't been this low since the early 1950s - and continue to go lower as the global economic crisis continues. However, the stock market is over sold while the bond market is over bought. Mortgage rates could head up soon as the markets begin to correct themselves. As such, I would not take too much of a chance in waiting for even lower mortgage rates.
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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Wow That's is great information and I like your charts!
Unbelievable employment numbers this morning. Rates are going down, but no one has a job.
Joe - thanks for your comments.
Drew - that's the problem! Mortgage rates are the lowest in many people's lifetimes, and they can't take advantage of them. I bet people will be taking that (as well as many other things) out on incumbent politicians this November.
Lew,
With economy obviously slowing down for a change we can expect some more erosion on home prices. Without these low mortgage rates this would be a royal mess.
Esko - You have that right. The housing market - and the economy for that matter - will not turn around until people go back to work. The weekly unemployment level remains just above the 450,000 mark every week - indicative that employers are not hiring.