Mortgage Rate Forecast for August 31, 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 103.25 this morning - the same as yesterday's close.
- At 9:30 AM, the 4.0% MBS coupon was trading at 103.47 - up 7/32 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 as much as 0.250 points better in price this morning as compared to yesterday afternoon.
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 8-1-2010 to 8-31-2010:
Economic Reports, News, and Events Affecting Mortgage Rates Today:
- Consumer Confidence Index (CCI) - consumer confidence for July rose to 53.5 - and is a little better than the 51.0 reading that was expected. The previous readings were 50.4 in July and 54.3 in June. However, consumer confidence is still weak given the current job market situation. Posted by the Conference Board, this measures consumers 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. Despite the lower CCI readings, this report had no impact on mortgage rates this morning.
In other news, according to the S&P Case-Shiller Home Price Index, home prices rose 4.2% in June - more than the 3.1% increase that was expected - showing that housing prices were stabilizing due to the government tax credit. On a year-on-year basis, home prices have slowed to an average 5.0% increase nationwide. While still encouraging, we do expect to see an increase in foreclosures and distressed home sales this year. We also expect to see further declines in the prices as sales of homes dropped in July, and the supply of homes on the market continues to increase.
Trend in Mortgage Rates:
The chart below shows the trend in mortgage rates over the past 5 years:
Mortgage Rate Forecast:
Mortgage rates are at their historic lows. They haven't been this low since the early 1950s. These low mortgage rates may be with us for some time - or they may not. Usually, mortgage rates go up during the summer months during the peak home buying season, then go down as the fall and winter seasons approach. But these are not "normal times." It's possible that mortgage rates will continue to slowly fall. However, as the last few weeks have shown, they could turn at any time.
If you're thinking about refinancing your mortgage and if these low mortgage rates make sense to you, then take advantage of them while you can. If you're happy with the mortgage 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.
Are you in need of a mortgage to purchase a home? Or want to refinance an existing mortgage into a lower permanent fixed rate? Or want to take cash out of the equity of your home? Or consolidate debt and reduce the monthly bills? Then be sure to request a mortgage rate quote today!
