Florida Mortgage Daily - Daily Guidance on Florida Mortgage Rates

Locking Stance: LOCKING    Mortgage Bonds: +16bp

Mortgage bonds got off to a good start this morning, but are already retreating from their highs.  The Fed has started purchasing mortgage backed securities this morning and will report on their progress towards the $500 billion limit every Thursday.  Until then, there is no way of knowing exactly how much the Fed purchases are propping the markets, but with the pullback this morning may very well be showing the Fed is the only buyer at the moment.

What does this mean for Florida Mortgage Rates?  As the Fed begins to buy mortgage bonds, in their efforts to drive mortgage rates lower, or at least keep them at these levels, mortgage rates will likely remain somewhat steady.  The uncertainty of the Fed’s ability to succeed makes locking a safe bet and only those willing to take risks should even attempt to float right now.

Locking Stance: CAUTIOUSLY FLOATING    Mortgage Bonds: +22bp

Mortgage bonds appear to be in a position to offer slightly better rates in the near future as they are at the bottom of a trading range, a sideways pattern, and the charts are favorable for them climbing back to the top of that range.  With no data today, news and technical indications will be leading the way and that looks good for now.

News from the House is that they will not have the stimulus package on Barack Obama’s desk by January 20th, Inauguration Day, rather they are expecting by mid-February.  The total package is expected to be valued as high as $1 trillion, adding more fuel to the inflation fire through gross government overspending and proving they will not stop until the economy is completely destroyed.

What does this mean for Florida Mortgage Rates?  Mortgage rates may improve slightly in the near term, offering at least a brief period that floating your rate can prove beneficial. 

Locking Stance: LOCKING    Mortgage Bonds: -38bp

Mortgage bonds had started the day off nicely, but were overcome by advances in the stock market, which had the DJIA closing above 9,000 and S&P and Nasdaq up nicely as well.

All this occurred even when the ISM Index came in below expectations with 32.4 versus  35.4, signaling continued economic contraction.  It also marked the lowest level in nearly 60 years.  Mortgage bonds did finish off their lows, having been down over 60 basis points earlier in the day.

What does this mean for Florida Mortgage Rates?  Mortgage rates continue to remain relatively steady, though a slight tick higher may occur.  Long term projections still favor higher mortgage rates.

Locking Stance: LOCKING    Mortgage Bonds: +22bp

The first trading session of 2009 looks to be favorable for mortgage backed securities and mortgage rates.  But we have yet to see the first set of data of the new year, the ISM Index, and it is usually a big player to the markets.

We have seen a lot more volatility this week than last, so today may be no different as Monday will mark the return in full force of traders.  I hope everyone had a wonderful New Year’s celebration, because the party may be ending soon for mortgage rates, that is once the Fed is content with how much they propped the markets and wasting more of your hard earned money to do so. 

The first in what is likely to be many tax increases (or at least lack of extensions of tax cuts) is hitting the airwaves to start the new year.  The proposal is a $0.10 per gallon tax hike, on top of the already in place $0.18 per gallon tax.  At the gas station on my corner, where gas is currently $1.61, and all else remains the same, that tax would bring a gallon to $1.71 and include a tax rate of 16.37%, not inclusive of the local taxes which bring it higher.

As for mortgage rates, you may want to check out this post I did over the holidays, namely on my flight back from Brazil, talking about what may very well be the future of mortgage rates.

What does it all mean for Florida Mortgage Rates?  Mortgage rates will likely continue to remain steady today and for the foreseeable future.  The future, near and long term, is not as clear as government intervention may or may not be successful in lowering mortgage rates further.  The long term outlook is for higher mortgage rates.

I just wanted to wish you all a very Happy New Year and may 2009 be brighter than 2008.

Locking Stance: LOCKING    Mortgage Bonds: +28bp

Mortgage bonds managed to rally for a while this morning, but it fizzled out later on.  in a shortened trading day and the third volatile day in a row where bonds reversed direction, bonds had been up as much as 56 basis points, but ended the year only up 28 basis points from yesterday, unable to break away from their 10-day moving average.

Besides the Fed’s announcement yesterday and this morning’s mixed bag of news from the Initial Jobless Claims data, bonds did fairly well overall.  With trading ending at 2pm, the year completed with mortgage rates just slightly higher than their lowest levels.

What does this all mean for Florida Mortgage Rates?  Mortgage rates are going to remain steady into 2009, as expected.  Odds had been quite favorable for higher mortgage rates, and the fundamentals continue to favor that direction. 

Locking Stance: LOCKING    Mortgage Bonds: +50bp

Mortgage bonds are up on a day when they likely should be down and that is just scary right now.  I will get into why in just a moment, but let me recap yesterday briefly.  Mortgage bonds were down hard out of the starting gate, but then ended the day off its lows, down 25 basis points.

This morning saw unfavorable data in that Initial Jobless Claims fell to 492K, blowing away expectations of 575K.  In and of itself, it does not mean that the jobs front is getting better, but typically markets react negatively to numbers like this.  The only favorable news in the report is that the continuing claims remain at a 26-year high.

So what is really driving mortgage backed securities higher today?  It is again all about the Fed.  The Fed is not happy that mortgage rates are not low and that the markets will not drive them lower, so they made an announcement that the $500 billion they are going to use to buy mortgage backed securities will begin in January.  This is again artificially propping the markets, creating another bubble made by the government’s actions.

What does this all mean for Florida Mortgage Rates?  While you may see slightly better mortgage rates today, possibly even in January, right now it is still better to just lock your loans as volatility can change the picture very quickly.  If the picture changes significantly, I will let you know.

Locking Stance: LOCKING    Mortgage Bonds: 0bp

Once again, this report is coming to you before the market opens.  The reason this time is that my flight from Sao Paulo, Brasil last night was canceled and I am going to be on an airplane back during the trading day, unfortunately.  I will try to get an evening report to recap the days events when I get home.

There is some news that already may affect the market and that is that GMAC got a cash infusion despite yesterday’s news.  It is another demonstration of our government’s determination to continue handing out money, with $5 billion going to GMAC (GM’s finance division) and another $1 billion may be on the way. 

As far as data goes, only Consumer Confidence is slated for release today.  It will be released at 10am and is expected to show a slight improvement over last month.

What does this mean for Florida Mortgage Rates?  From the news and possibly even from the data, we can expect stocks to be up today, possibly sending mortgage rates slightly higher.

Locking Stance: LOCKING    Mortgage Bonds: -9bp

Mortgage bonds were off to a very good start today and I was even thinking I may change stances, though just for a moment.  Mortgage backed securities were up as much as 47 basis points at one time, before coming crashing back down.

As I mentioned before, news and technicals ruled the day and the continued air strikes by the Israelis in Gaza gave mortgage bonds a boost due to the uncertainty.  Other news was that GMAC failed to meet the debt-for-equity exchange conditions to become a bank holding company which prevents them from participating in the continued TARP handouts.  Also, the Kuwait government pulled out of a $17.4 billion deal with Dow Chemical, providing selling pressure on stocks.  The bottom line is that all markets, except oil and gold, which closed higher.

What does this mean for Florida Mortgage Rates?  Mortgage rates are set to remain steady for the foreseeable future with odds still leaning towards higher mortgage rates in the long term.

Locking Stance: LOCKING    Mortgage Bonds: 0bp

The mortgage markets are about to open, but with no data on the block today, news and technicals will rule the markets.  We have oil spiking this morning as a result of the Israeli air strikes in Gaza over the weekend and that means stocks could be moving higher.  It also may mark the beginning of the return of inflation, which is mortgage rates’ worst enemy.

I uploaded this week’s Mortgage Market Update over at Lenderama and mentioned I expected mortgage rates to remain relatively steady this week overall.  The charts are showing mortgage backed securities clinging to their 10-day moving average and within their trading range.  If they falter again, it may mark the end of low mortgage rates without continued government intervention, but I suspect we will not see the bubble pop this week.

What does this mean for Florida Mortgage Rates?  I am beginning to sound like a broken record as mortgage rates will likely remain steady.  The odds remain favorable for mortgage rates climbing in the longer term.