Mortgage Rate Forecast for August 10, 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 102.69 this morning - the same as yesterday's close.
- At 9:30 AM, the 4.0% MBS coupon was trading at 102.69 - the same as its opening.
Remember, on mortgage backed securities (MBSs), as the price goes down, the yield goes up - and so do mortgage rates. I expect that mortgage rates will be about the same in price this morning as compared to Friday.
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 7-11-2010 to 8-10-2010:
Economic Reports, News, and Events Affecting Mortgage Rates Today:
- Non-farm Productivity and Cost Index - fell 0.9% for the 2nd quarter of 2010. This is worse than expected, and follows a revised 3.9% increase in the 1st quarter of 2010. Labor costs rose 0.2%. There was a 3.6% increase in hours worked, but there was a 0.7% decline in hourly wages. This shows that productivity is decreasing as the economic recovery slows down. While significant, the report had little to no impact on the mortgage market or mortgage rates this morning.
In other news, the Federal Open Market Committee (FOMC) meets today, and will adjourn this afternoon. It will likely adjourn with an announcement of no change to key short-term interest rates, but we may see some volatility in the markets following the 2:15 PM ET post-meeting statement. There appears to be more and more discussion about when the Fed will have to start raising key interest rates to prevent inflation from strengthening. If the statement gives any hint of when that may be, or there is a change in the regular canned portions of the statement, we could see a sizable change to mortgage rates this afternoon.
The Treasury Dept will be auctioning $34 billion in 3-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 and mortgage markets market move higher during afternoon trading which in turn lead to lower mortgage rates. However, a lackluster interest from buyers, particularly international investors, would indicate a waning appetite for longer-term U.S. securities and lead to broader selling in the bond and mortgage markets. That in turn could lead to higher mortgage rates.
Trend in Mortgage Rates:
The chart below shows the trend in mortgage rates over the past 5 years:
Mortgage Rate Forecast:
Mortgage rates are holding steady at their historic lows. They haven't been this low since the early 1950s! And, these low mortgage rates may be with us for some time. 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, they could turn at any time - and will if future economic news shows that we're finally coming out of the recession.
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!
