Florida Mortgage Rates – Evening Report

by Florida's #1 Mortgage Planner on October 22, 2008

Locking Stance:  CAUTIOUSLY FLOATING     Mortgage Bonds:  +9bp

Mortgage bonds managed to stay above the flat line today, though they are down and we had a “red” pattern, meaning they closed below their opening price.  More importantly, they closed back below their resistance layer, and that creates concerns moving forward, possibly requiring a change back to a locking stance as early as the morning.

The DJIA closed down nearly 500 points with a wild ride over the last hour that would make anyone nauseous if it hadn’t become normal these days.  With that kind of drop, one would expect a greater move higher for mortgage backed securities, another warning sign. 

The dollar grew stronger again today with the expectations that the ECB and BoE would begin cutting their rates.  The sentiment has grown to a 90% chance that our own Fed will cut the Fed Funds Rate by at least .50% at their next meeting, which could create more problems overall.  The good news is the dollar’s strength is driving oil prices to lows we have not seen in years, which is good for everyone that drives (and flies).

Looking at the charts, it appears that the downtrend will continue, despite the recent price climb, though that could change if bonds can keep pushing higher.  Remember, a downtrend in mortgage bond pricing is actually a bad thing as it drives mortgage rates higher.  The charts are showing the current move higher weakening and that means the downtrend will likely remain in place and we can again expect higher rates in the future.  If that does in fact hold true, I will be changing my stance back to locking.

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