Mortgage Rate Forecast for Massachusetts for April 27, 2010
Here are some of the events affecting mortgage rates today in Massachusetts:
What Mortgage Backed Securities Are Doing Today:
- The price of the FNMA 30-Year 4.5% MBS coupon opened at 100.16 this morning - the same as yesterday's close.
- At 9:30 AM, the 4.5% MBS coupon was trading at 100.41 - up 8/32 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 0.250 points 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 4.5% coupon over the past 30 days from 3-28-2010 to 4-27-2010:
Economic Reports, News, and Events Affecting Mortgage Interest Rates in Massachusetts Today:
- Consumer Confidence Index (CCI) - consumer confidence for April rose 5.4 points to 57.9 - better than the 53.5 reading that was expected. The reading was 52.5 in March, and 46.4 in February. Posted by the Conference Board, this measures consumer willingness to spend. As a comparison, a reading of 80 or better is considered a signal of economic health. Retail sales typically move in tandem with consumer optimism. Because consumer spending makes up two-thirds of the U.S. economy, any related data is watched closely by market traders and can have a significant influence on the mortgage market. If consumers are less confident in their personal financial situations, they are less likely to make large purchases. The higher CCI readings helped stopped the decrease in mortgage rates this morning.
In other news, the S&P Case-Shiller Home Price Index fell 0.6%, reflecting a continuing weak demand for housing despite low mortgage rates and homebuyer tax incentives. On a year-on-year basis, however, home prices have increased an average 1.5% nationwide, the first annual increase since December 2006. While encouraging, we do expect to see an increase in foreclosures and distressed home sales this year. That coupled with the ending of the homebuyer tax credit program at the end of this month could lead to continuing declines in home values.
The Treasury Dept. will be auctioning $44 billion of 2-Year Notes today. The Notes and Bonds 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.
The Federal Open Market Committee (FOMC) meets today, and will adjourn tomorrow afternoon. While we don't expect to see any change in the key short-term interest rates - currently at 0 - 0.25% - we may see some volatility in the markets after the release of their post-meeting statement tomorrow afternoon. Traders will be focused on that statement and will be looking for any signs the Fed will have to start raising key interest rates soon. Any hint or indication of increases in the key short-term interest rates could result in higher mortgage rates Wednesday afternoon.
What's Happening With Mortgage Interest Rates in Massachusetts Today:
Moderate to High Volatility. Mortgage rates are off their historic lows, and while they rose significantly a couple of weeks ago, they have since come back down a bit. But this may be temporary.
The overall economy is improving without any increase in jobs. The Fed has also ended their purchases of mortgage backed securities. In addition, the federal deficit continues to grow while demand for US debt is waning. We're also entering the prime home selling and buying season. Historically, mortgage rates rise and fall with the thermometer. Usually from this time of the year and into the summer months, as the weather warms, mortgage rates rise.
As such, there's little or no potential for lower mortgage rates anytime soon. If you're happy with the interest rate being offered to you today and if you don't want to risk mortgage rates moving higher, then you should apply and lock in now. It's better to have locked when you should have floated than it is to float when you should have locked.
If I were applying for a mortgage today, I would lock in my rate. However, if I were to continue floating my rate, I would proceed with caution and maintain contact with my mortgage professional. I would be ready to lock in at a moment's notice as mortgage rates can change for the worse.
Be sure to check out today's Massachusetts mortgage rates.
