Florida Mortgage Rate Forecast – August 27, 2010

by Florida's #1 Mortgage Planner on August 27, 2010

Locking Stance:  LOCKING     Mortgage Bonds:  -3bp

What an interesting last 24 hours as we saw mortgage backed securities rebound yesterday, all the way back to its resistance layer and some lenders did re-price for the better, but far from all.  This morning saw stock futures rally and MBS prices plummet, erasing the gains of yesterday and by the time some lenders priced this morning, there were no gains to be found (something we expected, hence why we remained “locking”).  Now, if you are lucky you are with a lender which prices at 10:00, you will make some minor gains, but those are already in jeopardy today and everyone else will be out of luck.  The bottom line is if you locked yesterday per our advice, you are likely better off than if you floated into this morning.

Today is a big day, just as we mentioned before.  GDP was the starter of the day and came in better than analysts expected (we played that right), coming in at 1.6% versus the 1.3% expected.  In the underlying numbers, real final sales to domestic purchasers was revised higher to 4.3% from 4.1% and many traders are playing off that number as well.  On the inflation front, the GDP Price Index was bumped up to 1.9% from 1.8%.  While that is not a big deal overall, it is certainly not a move in the right direction for MBS prices to make gains.  One favorable report was the Consumer Sentiment report, which was reported at 68.9, below expectations of 69.6 (same as last reported).  MBS prices rose all the way back to above their “flatline” as a result, and even off the initial reaction from Ben Bernanke’s speech in Jackson Hole, Wyoming.  We may get more on that later, but the gist is that the economy is not improving like they hoped (duh) and they are standing ready to throw more money at it if needed.  The “spook” here is that he mentioned that inflation is below healthy levels…"inflation has declined to a level that is slightly below that which FOMC participants view as most conducive to a healthy economy in the long run.”  Now it appears the resistance layer will hold and mortgage rates may even be ready to start edging higher.

What does this mean for Florida Mortgage Rates?  Mortgage rates are starting to edge higher today in a very volatile today.  The outlook is indeed changing and concerns are now essentially outweighing potential awards as they began to show yesterday.  If things improve, we will let you know, but for now it appears locking remains the best option.

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