Florida Mortgage Rates – Morning Report

by Florida's #1 Mortgage Planner on May 28, 2009

Locking Stance: LOCKING    Mortgage Bonds: +22bp

Mortgage backed securities took a major beating yesterday, and that is putting it mildly.  They closed the day down 206 basis points, which equates to dramatic increase in mortgage rates from Tuesday to Wednesday, and over 1% in the last week (actually less when you factor in the holiday).  Today may see more increases in MBS pricing (lower mortgage rates), but it will be a mere retracement pattern if anything, the question being how much and for how long.  Data will remain unfavorable as we are seeing.

This morning’s data plays were Durable Goods Orders and Jobless Claims, both beating expectations.  Durable Goods Orders were significantly higher than expected, coming in at 1.9% versus 0.0% and even taking out transportation, they were up 0.8%.  Certainly not a bad showing these days.  Jobless Claims also were not mortgage bond friendly as they came in at 623K versus expectations of 635K, and the 4-week rolling average dropped to 626.75K.  The numbers are certainly not good, but beating expectations these days is all that makes traders react.  Also, stocks are poised to climb out of the starting gates, and that usually means mortgage backed securities suffer in the money flow war.

Still to come are Crude Inventories (delayed one day for the holiday) and New Home Sales.  Also, more Treasury supply hits the markets this afternoon in the form of the 7-year T-Note, which could weigh heavily on MBS pricing.  The Treasury Department will also be announcing the amounts of the next short term Treasuries (3 & 6 month and 1 year).  Richard Fisher will be speaking late this afternoon, after the markets close.

What does this mean for Florida Mortgage Rates?  Today may be the beginning of a needed retracement, though mortgage rates may still rise after lenders do their pricing this morning.  The long term outlook remains favorable to higher mortgage rates.

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