Florida Mortgage Rates – Evening Report

by Florida's #1 Mortgage Planner on December 17, 2008

Locking Stance: LOCKING    Mortgage Bonds: -28bp

Mortgage bonds had a dramatic day full of “mood swings”.  First they were up considerably, then came crashing down, finally settling down only 28bp.  Also, if you have been checking mortgage rates, you likely had a different answer every time you called, but no dramatic changes.

Looking at lender pricing and re-pricing is enough to give anyone a headache on days like this.  Some make sense, some do not.  Overall, lenders appear to be doing what I mentioned before, hedging against risks and thus mortgage rates are not dropping.

Looking at the technical indications, things are beginning to change for the worse.  Stochastic indications are pegged to the roof, meaning mortgage backed securities are overripe for a correction.  Mortgage bonds have held above the two resistance layers they broke through yesterday, but that may not hold long term. 

The only good thing really giving mortgage bonds a chance is the Fed’s determination to continue buying up mortgage bonds and driving mortgage rates lower.  With lenders throwing in more “hedges” to protect themselves from the “whiplash”, the Fed’s job will be hard and they will be stuck with the “hot potato”.

What does this all mean for Florida Mortgage Rates?  The Fed will continue to make a valiant effort to drive down mortgage rates, but even driving down mortgage bond pricing will not yield much benefit to consumers regarding mortgage rates.  Lenders will continue to price in some hedging to protect themselves from the artificial move the Fed is creating.

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