Florida Mortgage Rates – Afternoon Report

by Florida's #1 Mortgage Planner on June 4, 2009

Locking Stance: LOCKING    Mortgage Bonds: –106bp

I have now been watching the 4.5% coupon bond instead of the 4.0% for referencing in these reports, but even that is about to hit its 200-day moving average.  The 4.0% coupon bond has lost its relevance with the recent MBS pricing plunges, and both have similar trading patterns anyway.  While the 4.5% mortgage bond is down 106 basis points right now, the 4.0% mortgage backed securities are down 131 basis points, which has sent them through their 200-day support layer and adding to indications that the “Mortgage Rate Bubble” may have popped.

Part of the reason for the recent drive up in mortgage rates has been the Fed themselves, you know, the ones whom promised lower mortgage rates.  They have been cutting back their MBS purchasing in recent weeks, as demonstrated in today’s weekly summary ($25.8B net/$27.7B gross).  Their cutbacks have allowed market forces to truly take over and that has done exactly what I have been forecasting for a while, a climb higher in mortgage rates.

Whether it is the Chinese cutting back their purchasing as well, inflationary fears, or whatever acting as further catalysts, the market had been artificially propped by the Fed and now that the Fed is backing away somewhat, the markets are showing their true colors.  Some believe the Fed will step back in and save the day, but that remains to be seen and many whom believed this morning that it was still time to float their pipelines are finding themselves scrambling to get their clients locked.  As for tomorrow’s jobs data, it may allow a rebound, but we may have to wait and see.

What does this mean for Florida Mortgage Rates?  Mortgage rates are again on the climb at the moment, and that may be true for some time to come.

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