Florida Mortgage Rates – Morning Report

by Florida's #1 Mortgage Planner on May 20, 2009

Locking Stance: LOCKING    Mortgage Bonds: +3bp

Mortgage backed securities had a lackluster day yesterday and ended the day up 3 basis points.  This morning, they have edged slightly higher thus far, but will face some resistance as well.  There are some negative indications entering the chart patterns, namely the 25-day moving average is about to crossover the 50-day moving average, a negative sign as pricing moves lower.  We now have a double resistance layer at that crossover point with the 25-day and 50-day moving averages being about equal.

The news this morning continues to show a weak housing market as purchase applications dropped again.  The good news is that refinances gained slightly, so that may help stave off some of the impending foreclosures.  As the day continues, Crude Inventories will be released and the biggest chance for the markets to break resistance (or support) will come with this afternoon’s FOMC Minutes release, essentially the “Fed Unplugged”.  Charles Plosser will be speaking tonight as well.

As for the direction of Mortgage Rates and the driving forces behind them, one may think the Fed is again predicting market reaction to the FOMC Minutes.  How so?  They announced they will be buying MBS between 1:00 and 1:30, just before the FOMC Minutes are released.  That should help prop the markets up, at least slightly, during the morning hours as traders try to enjoy a “free ride”.  It will be interesting to see exactly what happens later in the day as a result of their actions, and that of trader reaction to the FOMC Minutes.  Keep in mind that the Fed also realizes that traders follow the charts as well and will likely try to “bust the pattern”.

What does this mean for Florida Mortgage Rates?  Mortgage rates will likely hold steady this morning, but may move in either direction this afternoon.  With negative patterns forming in the charts, the odds favor any move being toward higher mortgage rates at the moment.

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