Florida Mortgage Rates – Morning Report

by Florida's #1 Mortgage Planner on April 1, 2009

Locking Stance: LOCKING    Mortgage Bonds: 0bp

Yesterday saw any potential rally in mortgage backed securities get snuffed out as they ended the day up only 6 basis points (FNMA 4.0%).  Even the potential for a rally on this morning’s dismal ADP Employment Report has not blossomed, at least not yet, and that means market forces remain focused on inflationary fears and not the weak economy, or at least that they feel mortgage rates need to climb still.  As I have said before, the Fed new this and needed to up their MBS purchasing by 150% in order to keep mortgage rates steady.

Looking at things overall, the ADP Employment Report showed a loss of 742K jobs, which should have helped spark a rally.  Traders may be simply waiting until 10:00’s ISM Index release, but the markets do not look optimistic for mortgage rates right now and the charts are not painting a great picture either.  Stochastic indications are back in the overbought spectrum and MBS pricing is up against resistance of the prior recent closing high (after the Fed move).  The last few trading days have had their range move to this level and fall back, which is not a positive sign.

A lot of things happened yesterday afternoon that helped prevent any rally.  Good Ole Financial Services Committee Chairman Barney Frank, you know the guy that helped create this mess in the first place, is encouraging the SEC to reinstate the uptick rule for shorting stocks.  He is also supports the any process that allows banks to recover losses on mark-to-market accounting.  On top of that, Charles Plosser went on record to state he was happy with the recent economic data and the Fed could start raising rates even before the jobless rate peaks.  Hhhmmm, is the Fed starting to worry about inflation?  The Fed did pump in over $3.2 billion in MBS purchasing yesterday.

What does this mean for Florida Mortgage Rates?  Expect mortgage rates to hold steady by Fed actions, or they will likely move higher for the foreseeable future.

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