The Mortgage Interest Rate Lock Advisory for Portland ME for September 24, 2009

The Mortgage Interest Rate Lock Advisory for Portland ME for September 24, 2009

Here are some of the events affecting mortgage interest rates today in Portland, Maine.

What the Mortgage Backed Securities Market is Doing Today:

The price of the FNMA 30-Year 4.5% MBS coupon opened up 1/32 this morning to 100.69.

The price of the FNMA 30-Year 4.5% MBS coupon closed up 1/32 yesterday at 100.66 (as shown by the white line). MBS is currently trading up 5/32 at 100.81 (as shown by the blue line). Remember, on mortgage backed securities (MBSs), as the price goes up, the yield comes down - and mortgage interest rates come down with it. I expect that mortgage interest rates will be 0.125% - 0.25% better in price this morning as compared to yesterday.

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

• Existing Home Sales Report for August - existing home sales fell 2.7% to 5.10 million in August - less than the 5.35 million that was expected. The supply of homes for sale fell 10.6% to 3.622 million. There's now a 8.5 month supply of homes, down from 9.3 months in July, and 10.6 months a year ago. The supply of homes on the market indicates how long it will take to sell the current inventory of home for sale if no other homes were put on the market. While this data indicates the current trend on home sales, it's usually not considered to be very important to the mortgage market.
  
  
• Jobless Claims - There were 530,000 new claims for unemployment last week. Analysts predicted that 555,000 new claims would have been filed. This is the third week in a row that we saw a decline in the news claims for unemployment. The 4-week average is down to 553,500 - the lowest level since January. Continuing claims for unemployment also fell - it now stands at 6.138 million. With the continuing high rate of people unemployed, the threat of wage based inflation remains subdued. Employers do not have to pay higher wages to attract new employees during high unemployment times as people will be happy just to have a job. This data is usually not considered to be very important to the mortgage market.
  
  
• Fed's MBS Purchase Program - The results of this week's purchases of mortgage backed securities by the Feds will be released in the afternoon. As of last Thursday, the Feds have purchased over $862 billion in mortgage backed securities this year. The Feds plan on purchasing up to $1.25 trillion in mortgage backed securities through December 31st.

The FOMC meeting adjourned yesterday with no change in the key short-term interest rates. The Fed stated that while economic activity has improved, they expect that "inflation will remain subdued for some time." The only surprise was the FOMC's announcement that they will ease the purchase of mortgage backed securities. The program will be extended to the end of the first quarter of 2010 to minimize the risk of a yield spike when the Fed finally exits the market. The purchase of mortgage backed securities is still capped at $1.25 trillion.

The 5-year Treasury Note auction that was held yesterday was met with lackluster demand. This had a negative impact on bonds and mortgage backed securities that led to a rise in mortgage interest rates. However, the FOMC's comments indicating that inflation will remain subdued had a positive impact on mortgage backed securities yesterday afternoon, which in turn led to lower mortgage interest rates.

What's Happening With Mortgage Interest Rates Today:

Low to Moderate Volatility. Overall, look for less volatility in the mortgage market today as compared to yesterday. But the results of the 7-Year Note auction are due out at 1 PM this afternoon. If the results of yesterday's 5-Year Note auction is any indication, volatility could pick up this afternoon.

My Mortgage Interest Rate Lock Advice for Today:

If I were considering financing/refinancing a home, I would...

• Lock if my closing was taking place within the next 7 days
• Float if my closing was taking place between 8 and 30 days
• Float if my closing was taking place between 31 and 45 days
• Float if my closing was taking place between 46 and 60 days

This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of any or all other borrowers.

For the best mortgage interest rates in Portland, ME, click here.