The Mortgage Interest Rate Lock Advisory for Saco ME for November 3, 2009

The Mortgage Interest Rate Lock Advisory for Saco ME for November 3, 2009

Here are some of the events affecting mortgage interest rates today in Saco, ME.

What the Mortgage Backed Securities Market is Doing Today:

The price of the FNMA 30-Year 4.5% MBS coupon opened at 100.97 this morning - up 1/32 from yesterday's close.

The chart below shows today's price trend of the FNMA 30-Year 4.5% coupon:

The FNMA 30-Year 4.5% MBS coupon is currently trading at 100.81 - down 6/32 opening. Remember, on mortgage backed securities (MBSs), as the price goes down, the yield goes up - and so do mortgage interest rates. I expect that mortgage interest rates will be 0.125% - 0.25% worse in price this morning as compared to yesterday.

Recent Activity in Mortgage Backed Securities:

The chart below shows the price trend of the FNMA 30-Year 4.5% coupon over the past 30 days:

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

• Factory Orders Report for September - the report revealed a 0.9% increase in new orders. Analysts expected a 1.0% increase. This follows a 0.8% decline in August. This report is similar to the Durable Goods Orders released last week, except it includes orders for both durable and non-durable goods. This report has little or no impact on mortgage interest rates this morning.

In other news, the Federal Open Market Committee (FOMC) begins its two day meeting today. The FOMC is the policy-making arm of the Federal Reserve, and determines what the short-term interest rate (or federal funds rate) should be. The Fed announces whether it will change the fed funds target rate at the end of each FOMC meeting.

It's expected the Feds will leave interest rates unchanged. However, traders will be looking at the post-meeting statement for any indication of when the Fed may make a move. The meeting will adjourn at 2:15 PM ET tomorrow, so look for any market reaction to the statement to come during afternoon hours.

There is an expectation that the Fed may alter its policy statement to take away any perception that the Fed will keep interest rates low for a "considerable" period by removing the word "considerable." That will allow the Fed to have more flexibility in determining short-term interest rates the future. That could have a negative impact on the mortgage market and may lead to higher mortgage interest rates.

What's Happening With Mortgage Interest Rates Today:

Moderate to High Volatility. Overall, the single most important day is Friday with the release of the Employment Situation Report. In addition to the economic reports and the FOMC meeting, I believe activity in the stock markets will be volatile which in will have an impact on trading of mortgage backed securities. If you have not yet locked in your mortgage interest rate, please proceed with caution and maintain contact with your mortgage professional.

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.

Get today's mortgage interest rates for your situation in Saco, ME.