Florida Mortgage Rates – Afternoon Report

by Florida's #1 Mortgage Planner on September 8, 2008

Locking Stance:  CAUTIOUSLY FLOATING     Mortgage Bonds:  +150bp

I know some of you probably wonder why I went to locking earlier and that was easy…I don’t like “risking” clients money without being able to “see” what the future lies.  Translated, that means if I cannot use the charts to forecast rates, there is too much uncertainty about what will happen to risk your money. 

What is happening is a huge flow of money into mortgage backed securities due to the government’s bailout of Fannie Mae and Freddie Mac.  With the government now in control, traders see mortgage bonds as a safe investment again and the “perceived risk” has dropped, allowing mortgage rates to drop.  The reality is that the government’s takeover has placed FNMA and FHLMC debt into taxpayers hands, meaning if they fail or lose money, that’s OK, because the debt will be spread amongst the taxpayers.

So, where are bonds headed?  That depends on when the dust settles.  One thing you can bet on is a move lower that will help correct the markets after this run up as that is all but guaranteed.  At this point, if you haven’t locked, be ready to do so at a moment’s notice, but there may yet be a few more “ticks” to gain, just be cautious.

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