Mortgage rate forecasts are no longer being posted to this website to protect the integrity of their content, value, etc.  As of October 4, 2010, all mortgage rate forecasting is being uploaded to our new website, Mortgage Rate Forecaster™, which will add additional commentary and benefits as part of its subscription service.  More benefits will be added over time as the membership grows, including the hiring of other experts in the field to ensure timely posts are made and provide the most accurate information available.

While we know many of you have been consumers and are in various stages of the mortgage process, we invite you to become a member for one month (or more) to ensure you know when to lock your mortgage, if you have been following our advice.  You, of course, are welcome to maintain your membership if you chose to do so.  Mortgage Rate Forecaster™ is being developed for all real estate professionals, though mortgage professionals will likely be the main subscribers and consumer may receive benefits as well.

We thank you for visiting our website and looking forward to having you remain part of our “family” over at Mortgage Rate Forecaster™.

Locking Stance:  CAUTIOUSLY FLOATING     Mortgage Bonds:  0bp

Mortgage backed securities rebounded yesterday, then crashed again this morning before rebounded yet again.  The bottom line is the pattern is not leaving anything definitive right now as we come to a close this week.  Things may yet change, so we must remain cautious.

There were several key data plays today as we saw Personal Income and Outlays (includes PCE), Consumer Sentiment and the ISM Manufacturing Index.  Personal Income was higher than expected at 0.5% versus 0.3% and rose to 3.3% year/year.  Consumer Spending was inline with expectations at 0.4% and its year/year dropped to 2.7%.  Core PCE (the Fed’s favorite gauge on inflation) was inline with expectations at 0.1% and its year/year is at 1.4%, just below the Fed’s target range of 1.5-2.0%.  Consumer Sentiment came in at 68.2, above estimates of 67.0 and up from 66.6.  But the big event really was the ISM Manufacturing Index, which came in at 54.4, just below expectations of 54.5 and down from 56.3.  This became the main event because it is opposite what we just saw in yesterday’s Chicago PMI report.  As a result, the earlier data was overwhelmed and the traders sentiment now favors MBS prices, at least for the moment.  Remember, traders are “moody” and that may change things.

What does this mean for Florida Mortgage Rates?  Mortgage rates are actually rebounding from this morning’s pricing, so floating is in order.  The overall outlook remains unclear at the moment and will need another trading day (or a few) to finalize its pattern.

Locking Stance:  LOCKING     Mortgage Bonds: –34bp

Mortgage backed securities failed to rally again yesterday and ended the down falling further.  Today does not appear like they will be gathering any steam either, leaving us hoping for a sideways pattern at best.  Yesterday’s fall was following several Fed speeches; Charles Plosser (Philadelphia) stated he does not favor more bond buying, Rosengren (Boston) stated further monetary stimulus depends on economic data, and Kocherlakota (Minneapolis) stated that asset buying will have minimal impact.

Today’s data certainly is not helpful either.  Jobless Claims were just below expectations, coming in at 453K versus 459K, which brings its 4-week moving average down to 458K, marking the fifth straight week of declines.  Real GDP came in at 1.7%, just above expectations of 1.6%.  The GDP Price Index, aka Chain Deflator, came in inline with expectations at 1.9%.  That brings the year/year Real GDP to 3.0%, up from 2.4% the first quarter.  And finally, Chicago PMI was just released and beat expectations with a 60.4 versus the 56.0 expected and up from 56.7.  That should be the final blow to ensure MBS prices do not attempt to test resistance again.  With the move lower, MBS prices fell below their 10-day moving average and are about theri 25-day moving average.  Any continued move lower that does not see a rebound would take them below the “sideways trading pattern” range and likely set up a downtrend.

What does it mean for Florida Mortgage Rates?  Mortgage rates are again edging higher today.  The outlook is not solid and we may remain in fairly stable mortgage rates.  However, there is a chance mortgage rates continue there rise beyond recent levels.

Locking Stance:  CAUTIOUSLY FLOATING     Mortgage Bonds:  -3bp

Apologies for my absence yesterday but I went to the dentist expecting a quick trip and ended with getting a tooth extracted and a daylong experience.  It was a very informative day, however, so let’s recap it quickly before getting into today.

The Case-Shiller HPI was the first data to look at, which showed the 10-city unadjusted month/month change at 0.8%.  Once adjusted, however, it was a flat 0.0%.  That brings the year/year unadjusted to 4.1%.  That brings us to two months of price moderation after Spring’s surge with the trouble spots (West and Florida) showing contraction.  It will be interesting to see if prices continue to moderate.  Consumer Confidence came in at 48.5, well below the 52.0 expected and down from 53.5.  And finally, the 5-year T-Note auction went well with solid coverage and a stop-out rate one basis point below the 1:00 bid.  All of the data was favorable to mortgage backed securities and mortgage rates heading lower, but strong resistance pushed MBS prices back below its level.  Rep. Cardoza (D) did give much details, but he plans to introduce mortgage modification that allows homeowners to refinance into “fixed” rate loans regardless of income, LTV, or credit history.  Another failed government “salvation” attempt?  Most likely, but don’t worry as we all get to pay for it.  Yes, don’t buy into the BS about taxes, all of us will be seeing our taxes increase, just in more subtle ways.

Today is already proving that the resistance level, now attacked four times, simply does not want to break and that means that mortgage rates may be ready to turn back higher.  If it does, the best we can expect is a sideways trading pattern to form.  There is not much data today, with MBA Purchase Applications showing Purchase Applications rose 2.4% and Refinance Applications dropping 1.6%.  The EIA Petroleum Status Report showed Crude Oil Inventories were down 500K barrels.  Not much reaction in the markets, at least not yet.  Stocks are down slightly and MBS prices are off their lows, maybe setting up to attempt another crack at overhead resistance.  Their only hope for today is likely this afternoon’s 7-year T-Note auction, results at 1:00.

What does this mean for Florida Mortgage Rates?  Today may be mortgage rates’ last chance to break lower.  While we are skeptical, today’s 7-year T-Note auction may allow this to happen.  If not, expect a change in stance this afternoon.

Locking Stance:  CAUTIOUSLY FLOATING     Mortgage Bonds:  +47bp

What an interesting week we had while I was “away.”  I covered it and what lies ahead this week in today’s radio show.  It is definitely good to be back in a position I can watch the markets closely and provide the best commentary possible.  This morning shows mortgage backed securities attempting to establish a new trend still as one has yet to be etched in stone, or at least clearly shown in the charts.  We did see them break the downtrend last week and they may be able to get an uptrend going this week.

The only data today was the Chicago Fed National Activity Index, which came in at –0.42, down from –0.17, led by declines in production and employment related indicators.  Data certainly is not pointing towards the end of the recession as the NBER announced last week.  Of course, they were saying it ended back in June, 2009.  I guess the data didn’t get the memo.  We also saw the weekly short-term Treasury Auctions, which continue to be very strong, which is not surprising.  At 1:00, we will see the results of the first longer-term Treasury Auction, the 2-year T-Note, which we expect will go well.  Any surprises here, though, could send MBS prices lower.

We will omit the technical analysis today as it was covered in today’s radio show, so listen to it as it could get very interesting by week’s end.  Plenty of data will be hitting the airwaves, and sending ripples through the markets as the week draws to a close.  We will only say that we should be seeing a clear trend by week’s end.

What does this mean for Florida Mortgage Rates?  Mortgage rates have edged lower this morning and may continue to do so.  Currently, the risk/reward ratio favors floating, but not overwhelmingly, so exercise caution.  The long-term outlook is not “for sure” right now, but that “crystal ball” should clear up by week’s end.

Locking Stance:  LOCKING     Mortgage Bonds:  +72bp

OK, if you read our post yesterday and/or listened to the radio show, you knew we remained in a locking stance and saw the charts pointing to continued climb in mortgage rates.  We were wrong, but that was the first time in a long time, and due to the fact we were working on “lack of information” as well.  You see, I will take the blame and for the reasons I mentioned before, I am in an intensive training program for my airline job and I am unable to watch the charts or the markets, even last Sunday when I did the show and setup Monday’s post.

That being said, let’s look at what would have happened.  As you long-term followers know by now, whenever I cannot watch the markets closely, I always state so and always maintain a locking stance, regardless.  If I had been able to watch the markets, Monday’s report and the radio show would have definitely played out differently as you can imagine.  The good news is that this week should be the last time I am ever away from my computer for an extended period of time.  More good news is as I start my new business venture with Mortgage Rate Forecaster, I will be training more people to take over when I cannot be there, on top of adding more content, updates, and analysis.  Mortgage Rate Forecaster should still go live (and Florida Mortgage Daily ceasing posts) on October 1, 2010.  Make sure you sign up because that will be the only way to get a “big picture”outlook, as well as some other benefits I will be adding.

What does this mean for Florida Mortgage Rates?  Mortgage rates have edged down, but we cannot change our locking stance due to my inability to closely monitor the markets as is required.  I apologize for the inconvenience, but it is an unfortunate part of me working my two loves, the other being flying.

Locking Stance:  LOCKING     Mortgage Bonds:  0bp

This week will find our author away from his desk all week during the day, so posts will be untimely as he warned in last week’s and this week’s radio show.  This week’s show was pre-recorded late last night is should already be available at BlogTalkRadio.  The show was kept as short as possible, but was also just as complete as ever, including explaining briefly what is happening in the near future.

The week has some events to watch for, namely tomorrow’s FOMC Meeting Announcement where you want to pay particular attention to the Policy Statement and not worry too much about what they do with their Fed Funds Rate (does not directly impact mortgage rates).  We will try to have posts on daily to cover what happened and what we likely be the best course for the next day, just don’t expect them to be as timely as we normally get them out.  The good news is that this our inability to make timely posts this week will likely never occur again.

Have a good week and look for some updates, when possible, to be added late evening.

What does this mean for Florida Mortgage Rates?  Mortgage rates will likely be creeping higher this week, possibly the entire week.  We will not be able to post “timely” this week, but will post about this subject when we can.

Locking Stance:  LOCKING     Mortgage Bonds:  +22bp

Mortgage backed securities are trying to rally and the charts are showing uncertainty at this point.  MBS prices are trying to break the downtrend, but are unable to do so thus far, which leaves us in a peculiar position.  Do we continue the downtrend in MBS prices, does a sideways pattern develop, or can we actually get an uptrend going again?  Well, the latter two have many variables working against them, so the risk/reward ratio remains unfavorable.

Today was a big inflation day, though not related to the Fed’s favorite gauge on inflation which is Core PCE.  The Consumer Price Index (CPI) was released today and came in at 0.3%, inline with expectations and brings the year/year to 1.2%, far from a concern.  Core CPI, which removes volatile food and energy prices, came in at 0.0%, below expectations of 0.1% and that kept its year/year at 1.0%.  Overall, this report was certainly favorable for MBS prices, hence the reason they are attempting to break their “leg”, downward that is.  Consumer Sentiment was just released and came in at 66.6, below expectations of 70.0 and down from last report’s 68.9.  Another “win” for MBS prices to say the least, so today may yet play out favorably, but with the shrug off of this morning CPI data (MBS prices jumped and then fell back), the risks are just not acceptable at this point.

What does this mean for Florida Mortgage Rates?  Mortgage rates were attempting to move lower this morning, but appear to be failing in that attempt.  Overall, the outlook remains most favorable for mortgage rates moving higher.

Locking Stance:  LOCKING      Mortgage Bonds:  -22bp

Greetings from Barbados…  Mortgage backed securities turned lower yesterday as we expected.  As we have stated before, we cannot understand why some “gurus” recommend floating when the charts do not back their own recommendations, thus costing their clients thousands of dollars each (which we are certain gets past on to their clients).  MBS prices continue their decline today, though they are getting some support at the moment along their 50-day moving average.

Plenty of data today and the overall results were mixed, with the more impactful report actually being favorable for MBS prices and mortgage rates, thus keeping them from a total demise today.  Jobless Claims came in slightly better than expected at 450K versus 455K, though that drops the 4-week moving average down to 464.75K.  Producer Price Index (PPI) was released and was higher than expected at 0.4% versus 0.3%, though Core PPI was inline with expectations of 0.1%.  Overall, generally unfavorable for MBS prices in these reports.  However, the big surprise was the Philadelphia Fed Survey, a major report which results should be sending MBS prices higher, not just breaking their fall.  The Philly Fed came in at –0.7%, the second negative in a row, and well below estimates of –3.8%.  The only positive aspect of this report in regards to the economy (and it is a stretch) is that it was less negative than before.  Remember we mentioned that traders are back into that philosophy of “less bad” is the “new good”.  We also have seen Federal Reserve Gov Elizabeth Duke remarking at a hearing on the Home Mortgage Disclosure Act at the Chicago Fed and Treasury Secretary Tim Geithner testifying on the foreign exchange report before the Senate Banking Committee in Washington.

What does this mean for Florida Mortgage Rates?  Mortgage rates continue to rise and the outlook as we have mentioned before remains most favorable for them to continue to do so. 

Locking Stance:  LOCKING     Mortgage Bonds:  -3bp

Mortgage backed securities are all over the map today, going up and down in a very volatile session.  Remember what we stated yesterday, that the corrective move has moved to a solid enough level as to allow the next leg lower to begin and that appears to be what is still being set up.

Data today covered several points, though none typical make major waves in the markets.  MBA Purchase Applications started the day off by showing Purchase Applications dropped 0.4%, within the +/- 3% range we expected.  Refinance Applications also dropped as we expected, down 10.8% as mortgage rates ticked higher.  Certainly no surprises here and indicative of a housing market that remains on life support.  The Empire State Manufacturing Survey was released and came in below estimates of 5.0 with a 4.14 reported, down from 7.10.  Export Prices rose 0.8% and Import Prices rose 0.6%, bringing them both to 4.1% year/year.  The underlying numbers show stable prices in finished goods with consumer goods rising 0.2% after two prior months of 0.2% declines and capital goods up 0.2% after two months of 0.1% declines.  Industrial Production showed Productivity inline at 0.2% and Capacity Utilization was 74.7%, below estimates of 74.9% and down from 74.8% last report.  Overall, the data should be giving a boost to MBS prices, not keeping them steady, further indicating that this recent move higher was likely no more than a necessary correction.

What does this mean for Florida Mortgage Rates?  Mortgage rates are holding steady and may do so throughout the day, though volatility can be seen.  The risk/reward ratio continues to be unfavorable for floating mortgage rates at this time as the outlook remains more favorable for mortgage rates to resume their rise.