Florida Mortgage Rate Forecast – September 14, 2010

by Florida's #1 Mortgage Planner on September 14, 2010

Locking Stance:  LOCKING      Mortgage Bonds:  +41bp

Mortgage backed securities are having a very interesting day to say the least.  And so now we find ourselves in a very interesting position, one which we think marks the coming end of the corrective move and the setup for the next leg lower in MBS prices.  Of course, they are moving opposite of what they should be doing based on data.  Imagine that, doing what we said they would do, buck the “normal.”

As we mentioned yesterday, Retail Sales was due out today and it went as we forecast in yesterday’s radio show.  Retail Sales came in better than expected at 0.4% versus 0.3%.  When you take autos out of the equation, Retail Sales was even better at 0.6% versus 0.4%.  Certainly not a favorable report for MBS prices and mortgage rates, but MBS prices are climbing.  Why?  Well, we will get into that in a moment.  First, the remainder of the data.  Business Inventories came in at 1.0% versus 0.6% though it is not much of a market mover, just as today’s impending 4-week T-Bill auction will unlikely move the markets.  Tomorrow will bring some more moderate impacting reports, but they may be the catalyst that makes the markets move nonetheless.

Now for the reason MBS prices kept moving higher today.  Simply put, the corrective move was not solid enough, and the markets knew it.  We needed more of a move higher to pass the 50% mark and even to get to the top of what appears to be the top side of the downtrend range.  It looks like we are there now and that means the remainder of the day and into tomorrow will be key to whether or not mortgage rates continue to move higher.

What does this mean for Florida Mortgage Rates?  It looks like the best pricing we will get will be this morning’s mortgage rate sheets as the corrective move may be coming to an end.  We may yet get lucky, but the risk/reward ratio is currently not favorable for floating any longer.

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