Florida Mortgage Rate Forecast – September 10, 2010

by Florida's #1 Mortgage Planner on September 10, 2010

Locking Stance:  LOCKING     Mortgage Bonds:  -41bp

Mortgage backed securities are heading lower yet again, and this after getting beaten up more yesterday afternoon due to a very weak 30-year T-Bond auction.  Today’s drop marks the third day of drops in MBS prices, solidifying the trend reversal, though a move higher next week can be expected, maybe even on Monday.  We are hitting the 50-day moving average on the 4.0% FNMA mortgage bond and are bouncing off support well below the 50-day moving average of the 3.5% FNMA mortgage bond.  We hate to say it, but we told you this was going to happen.

Wholesale Trade was the only report on the docket today and that showed Inventories rose 1.3%.  This doesn’t typically make market waves and it didn’t today either.  Stocks are still in rally mode, though that will likely change soon as well.  After the close of trading today, we will see the monthly bond coupon rollover, so the charts will get somewhat skewed depending on its effect.  Overall, it looks like the new trend will be a downtrend in MBS prices, resulting in an uptrend in mortgage rates.  You will not want to miss Monday’s radio show, which may have multiple guests as well.  More on that later.

What does this mean for Florida Mortgage Rates?  Mortgage rates continue their climb, though a dip can be expected, most likely next week.  The risk/reward ratio is still unfavorable in the long-term, but the short-term’s risk/reward ratio is questionable as mortgage rates may dip some as early as Monday.  If you cannot stomach risk, don’t float and we are going to hold to locking at the moment.

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