Florida Mortgage Rate Forecast – August 31, 2010

by Florida's #1 Mortgage Planner on August 31, 2010

Locking Stance:  CAUTIOUSLY FLOATING    Mortgage Bonds:  +28bp

Our apologies for not posting yesterday as well as being unable to change the locking stance.  With our author being “unavoidably detained”, we were unable to post accordingly as we warned in the early hours.  Additionally our inability to communicate with him due to poor internet connections left us unaware of his intents prior to his departure from Paris, France. 

What happened yesterday?  Personal Income and Expenditures was released, which covers three reports in one, with the Fed’s favorite gauge on inflation, the Personal Consumption Expenditures Index (PCE) being included.  Personal Income rose less than expected at 0.2% and is up 3.0% year/year.  Consumer Spending rose 0.4%, bringing it to 3.4% year/year.  That kept Core PCE at 0.1%, inline with expectations and certainly calming any inflationary fears, at least for now.  But what about deflation?  Well, overall PCE came in at 0.2% and that keeps those deflationary fears at bay as well, again at least for now.  Needles to say, with both inflationary and deflationary fears at bay, MBS prices reacted very positively.  The short-term Treasury Auctions were solid as well, so there was nothing stopping MBS prices from climbing as stocks shot lower.

Today saw the Case-Shiller HPI which continues to show slight gains though its numbers were all less than prior and indicated trouble for home prices ahead.  The Chicago PMI, a heavy-hitter to say the least was also released and came in at 56.7, down from last report’s 62.3, but just above the consensus of 56.0.  And finally, just released was the Consumer Confidence Report and that was 53.5, above expectations for 51.0 and up from 50.4.  While the last two reports were above expectations, Chicago PMI is actually down considerably from the prior report and that is seen negatively and MBS prices continue to climb right now, setting record heights at this time.  That is good news if they can hold, but will be bad news if they get pushed back.  This week has some major reports coming out, much more due out than what we have already seen, so things can change, and do so very quickly.

What does this mean for Florida Mortgage Rates?  Mortgage rates are again edging lower and while the trend was in question last week, it appears to remain intact.  Currently, the outlook is again favoring steady to lower mortgage rates and the risk/reward ratio is again favorable.  Things could change at any moment, so be ready if they do.

PS – Don’t forget to join for today’s radio show at 11:00 ET, about an hour from now.

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