Trend and Forecast in Mortgage Rates on July 15, 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 101.41 this morning - the same as yesterday's close.
- At 9:30 AM, the 4.0% MBS coupon was trading at 101.53 - 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% 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 6-15-2010 to 7-15-2010:
Economic Reports, News, and Events Affecting Mortgage Interest Rates Today:
- Producer Price Index (PPI) - fell 0.5% in June, and follows a revised 0.3% decline in May and a 0.1% April. This means that prices paid at the producer level fell, and is keeping inflation in check. The decrease in the PPI was attributed mostly to a decrease in food and energy costs. At the core level, the PPI rose just 0.1% as expected. The core level excludes the more volatile food and energy prices. Falling prices decreases the fear of inflation and tends to have a positive impact on the mortgage market. While significant, this report had no impact on mortgage rates this morning.
- Jobless Claims - 429,000 new claims for unemployment were filed last week, 16,000 less than expected, and 29,000 less than the upwardly adjusted 458,000 claims filed the previous week. The four-week average for unemployment fell 11,750 to 455,250 while continuing claims for the week of June 26 rose by 22,000 to 4.581 million. All signs indicate the economy has been recovering of late but without much of an increase in jobs. This data is usually not considered to be very important to the mortgage market and had no effect on mortgage rates this morning.
- Industrial Production Report - production slowed to a 0.1% increase in June, but is better than the 0.2% decline that was expected. This follows a 1.2% increase in May and almost a year in steady gains. The decline is due primarily to an decrease in manufacturing, which is down 0.4%. Mortgage rates improved this morning due to the downturn in industrial production.
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. That being said, rates continue to slowly fall. As such, I would float and be ready to lock at a moment's notice.
If I were financing a home or refinancing a mortgage today, I would:
- Float if my closing was taking place within 7 days
- Float if my closing was taking place between 8 and 15 days
- Float 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.