Florida Mortgage Rate Forecast – July 26, 2010

by Florida's #1 Mortgage Planner on July 26, 2010

Locking Stance: CAUTIOUSLY FLOATING    Mortgage Bonds:  -3bp

Mortgage backed securities are trading in a fairly tight range today and are essentially unchanged.  There is little data today, leaving stocks and technical indications in the driver’s seat. 

New Home Sales was released this morning and was reported at 330K, above the 310K expected and up from 300K last report.  That is a rebound of 23.6% after falling 36.7% in May, leaving it down considerably still so don’t get overly optimistic.  The Chicago Fed National Activity Index was also reported this morning, coming in at –0.63 led by a deterioration in production and employment related indicators.  The index indicates subdued inflationary pressure from economic activity over the next year.  Next up were the 3-month and 6-month T-Bill Treasury Auctions, both coming in strong even with the rebound in equities. 

According to the charts, with MBS prices remaining above their 10-day moving average there is no need to rush into a locking stance.  We can see an ascending triangle pattern along with the current sideways trend which signals a coming need for a break out to either side.  With stochastic indications dropping to the bottom of the overbought spectrum, there is no need for a locking stance unless MBS prices drop and hold below their 10-day moving average, but keep in mind that the 25-day moving average is rising quickly as well, which could play a role in where mortgage rates move from here.

What does this mean for Florida Mortgage Rates?  Mortgage rates will likely continue to hold steady or improve slightly as the week gets rolling.  The overall outlook continues to look good and may even provide for new record setting low mortgage rates.  There are some concerns, but the risk/reward ratio is still favoring floating at this point.

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