The Mortgage Interest Rate Lock Advisory for Merrimack NH for October 22, 2009

The Mortgage Interest Rate Lock Advisory for Merrimack NH for October 22, 2009

Here are some of the events affecting mortgage interest rates today in Merrimack, New Hampshire.

What the Mortgage Backed Securities Market is Doing Today:

The price of the FNMA 30-Year 4.5% MBS coupon opened at 100.66 this morning - down 7/32 from yesterday's close ahead of the announcement of next week's Note auctions.

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 100.75 - up 3/32 from its 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, but may improve this afternoon.

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:

• Leading Economic Indicators (LEI) for September - the index increased 1.0% in September - the sixth monthly gain in a row - in what the report says is "consistent with developing recovery." Analysts expected to see a 0.9% increase. This indicates that the economy is recovering and economic activity is likely to increase. While this would have a negative impact on the mortgage market as it would fuel concerns about inflation, it appears to not have much of an impact on mortgage interest rates today.
  
  
• Jobless Claims - 531,000 new claims for unemployment were filed last week, substantially more than the 519,000 analysts were predicting. The 4-week average is slightly more than a month ago - it now stands at 532,250. Continuing claims fell by 90,000 to 5.923 million. However, it's difficult to determine whether the decline can be attributed to new hires or to the expiration of benefits. Generally, 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 $941 billion in mortgage backed securities this year. The Feds plan on purchasing up to $1.25 trillion in mortgage backed securities through March 31st.

Watch this video to learn more about why the economy is still fragile:

In other news, according to the Federal Housing Finance Agency (FHFA), home prices fell 0.3% in August, and follows a 0.3% increase in July. On a year-on-year basis, the index fell 3.6% in August, compared to a 4.2% decline in July.

The Beige Book was released yesterday. The Fed reported that while the economy is showing signs of stabilizing and is beginning to improve, inflation is not a concern at this time. While the housing market and manufacturing activity is improving, commercial real estate remains a big concern. They added that the labor market is still weak, and demand for bank loans is still weak and declining.

At 11:00 am today, the Treasury Dept. will announce the amounts for next week's 2-Year, 5-Year and 7-Year Note auctions. As before, these auctions are having an impact on mortgage interest rates.

There are a number of quarterly earnings reports scheduled for release this week that could affect the stock markets. If the earnings reports are good or better than expected, then you can expect traders to sell bonds and mortgage backed securities and move those funds into stocks. If, on the other hands, earnings reports are worse than expected, then you can expect traders to sell stocks and move those funds into bonds as a safe-haven.

What's Happening With Mortgage Interest Rates Today:

Moderate volatility. Overall, expect the mortgage market to be heavily influenced mostly by the stock markets today.

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
• Lock 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 Merrimack, NH.