Trend and Forecast in Mortgage Rates on July 13, 2010 - Improving, or...?

Trend and Forecast in Mortgage Rates on July 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 101.19 this morning - down 11/32 from yesterday's close.
  
  
• At 9:30 AM, the 4.0% MBS coupon was trading at 101.16 - down 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. But, today is monthly "roll-over" day, so I expect that mortgage rates will be about the same 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 6-13-2010 to 7-13-2010:

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

• International Trade Report - the trade deficit for May came in at -$42.3 billion, a little more than the expected -$39.0 billion deficit, and slightly more than the $40.3 billion trade deficit in April. The increase in the trade deficit is attributed to an increase in non-oil imports. The report had no impact on the mortgage market or mortgage rates this morning.

In other news, the Treasury Dept. will be auctioning $21 billion in 10-Year notes 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.

Corporations will begin releasing their quarterly earnings reports today. These earnings reports can heavily influence the stock market. That in turn can have an impact on the prices of bonds and ultimately 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.