Florida Mortgage Rates – Morning Report

by Florida's #1 Mortgage Planner on March 19, 2009

Locking Stance: LOCKING    Mortgage Bonds: –9bp

Mortgage bonds had a tremendous run after yesterday’s move (+138bp) by the Fed to increase their MBS purchasing by 150%, $750 billion, bringing the total to $1.25 trillion.  This move got traders on a buying spree for a free ride to profits, though don’t expect mortgage rates to drop significantly, or even for the long run as is being portrayed in the media.  If you caught my afternoon update yesterday, and hadn’t already locked, you will be better off this morning.

So what is the future looking like now that the 50-day moving average barrier has been broken?  The rally we saw was due to artificial stimulation, something the Fed has done in the past which resulted in “bubbles”, so the mortgage rate bubble is still being pumped up.  The question remaining is simply when will it burst.  Technical indications are showing mortgage backed securities in an overbought condition and, especially with yesterday’s move, need a correction.

Remember that data lately has been showing hints of economic recovery and the Fed’s move is most likely to maintain low mortgage rates versus driving them lower.  With the markets seemingly wanting higher mortgage rates, the Fed will need more money to keep rates low, fighting these market forces.  The only real negative data coming in is that surrounding jobs.  Jobless Claims this morning were still bad at 646K, but they were better than expectations.  Later today, we will see the Leading Economic Indicators (LEI) and, more importantly, the Philadelphia Fed Survey.  Chances are that when this data is released, MBS will be pressured lower and cause mortgage rates to tick slightly higher.

What does this mean for Florida Mortgage Rates?  Expect mortgage rates to tick higher today.  The outlook for the long term remains fairly unclear but mortgage rates will likely hold steady for the foreseeable future.

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