Florida Mortgage Rates – Afternoon Report

by Florida's #1 Mortgage Planner on June 9, 2010

Locking Stance: LOCKING    Mortgage Bonds: +22bp

I apologize for the tardiness of today’s report, but today was the last day of school for my kids and I had other agenda items that needed to get done.  Nevertheless, if you have been following me for the last few days, you knew I would not change my stance even with MBS prices climbing at the moment due to an unfavorable risk/reward ratio.  While mortgage rates are managing to edge lower, there could be a turn around which could wipe out those gains very quickly and it is due.

Yesterday’s main attraction was the 3-year T-Note auction, along with the Fed’s hot air, which is getting fairly interesting at times.  Just look at all of the double-speak.  The 3-year T-Note auction saw pretty solid results and kept MBS prices alive going into today.  Data started rolling in today as it has been scarce the last two days.  MBA Purchase Applications was the starter, showing another drop in Purchase Applications, down 5.7% and Refinance Applications plummeted 14.3% just as I mentioned would likely happen on my radio show.  Ben Bernanke is back in the spotlight again right now, as he was earlier today.  Despite recent economic numbers showing an economy struggling, he still sees it making modest gains moving forward.  He is right in expressing concerns about credit constraints as they are likely to get worse before they get better.  Wholesale Trade came in as expected at 0.4%.  The Beige Book showed the following:

"Consumer spending and tourism activity generally increased. Business spending also rose, on net, with employment and capital spending edging up but inventory investment slowing. By sector, nonfinancial services, manufacturing, and transportation continued to gradually improve. Residential real estate activity in many Districts was buoyed by the April deadline for the homebuyer tax credit. Commercial real estate remained weak, although some Districts reported an increase in leasing. Financial activity was little changed on balance, although a few Districts noted a modest increase in lending.”

"Consumer spending improved from the previous report. Spending continued to be concentrated in necessities as opposed to discretionary big-ticket items."

And that brings us down to the big ticket item of today, the 10-year T-Note Auction.  We continue to see the flight to quality, which will likely last for a while longer.  The results of the 10-year T-Note Auction were solid with a 3.24 bid/cover and 3.242% yield.  Keep in mind that one thing the Treasury is doing is reducing the size of these auctions.

What does this mean fro Florida Mortgage Rates?  Mortgage rates are edging lower still, but the risk/reward ratio is still unfavorable as there is a strong need for a corrective move.  Overall, the outlook still favors steady mortgage rates, though we will likely see mortgage rates edge higher again in the near-term and possibly back lower afterward.

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