Go With Your Best Option - Sleepless in Sturbridge

Mortgage Rate Forecast for August 13, 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 102.38 this morning - the same as yesterday's close.
  
  
• At 9:30 AM, the 4.0% MBS coupon was trading at 102.72 - up 5/32 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 0.125 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 4.0% coupon over the past 30 days from 7-14-2010 to 8-13-2010:

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

• Consumer Price Index (CPI) - as expected, the overall price index rose 0.3% in July - mostly because of rising energy costs. The core data, which excludes the more volatile food and energy prices, rose 0.1% as expected. This is one of the most important monthly reports that we see as it measures inflationary pressures at the consumer level of the economy. Year-over-year, inflation remains low at 1.3%. This report had no impact on the mortgage market or mortgage rates this morning.
  
  
• Retail Sales Report - Consumers are still spending. Retail sales rose 0.4% in July, slightly less than expected, and is mostly due to a rise in auto sales. When auto sales are excluded, retail sales rose 0.2%. When auto and gasoline sales are excluded, retail sales fell 0.1%. However, retail sales are still up 5.5% from this same time last year. The retail sales report measures consumer spending by tracking sales at retail establishments. This is one of the more important reports we see each month because consumer spending makes up two-thirds of the economy. The retail sales report had no impact on the mortgage market or mortgage rates this morning.
  
  
• University of Michigan's Index of Consumer Sentiment - came in with a reading this morning of 69.6, a little better than expected, but still down significantly from April's and May's readings. This index measures consumer willingness to spend and can usually have enough of an impact on the financial markets to change mortgage rates. This report indicates that consumers are not very likely to make many purchases. The consumer sentiment report did not have an impact on the mortgage market or mortgage rates this morning.

Trend in Mortgage Rates:

The chart below shows the trend in mortgage rates over the past 20 years:

Mortgage Rate Forecast:

Mortgage rates are at their historic lows. They haven't been this low since the early 1950s - and continue to go lower as the economic recovery slows. 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!

 

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	Lew Corcoran, Sr. Mortgage Consultant in Massachusetts Conventional Loans / Conforming Jumbo Loans Jumbo Loans to $2 Million Reverse Mortgages / FHA Loans / VA Loans USDA Rural Development Loans FHA 203(k) and HomeStyle Rehabilitation Loans FNMA HomePath Mortgages / MassHousing Mortgages