Florida Mortgage Rates – Morning Report

by Florida's #1 Mortgage Planner on July 14, 2009

Locking Stance: CAUTIOUSLY FLOATING    Mortgage Bonds: –34bp

Mortgage backed securities managed to hold their own yesterday by closing above their 10-day moving average and that meant they remained above their 50-day moving average as well.  While they were showing weakness, so long as they held above these levels we could afford to wait until data started shooting holes in the floor.

This morning saw data play out with both the economy and inflation front and center and you can revert back to what I have been saying about inflation lately…it is coming, period.  The Producer Price Index (PPI) was released this morning and inflation at that level was considerably higher than estimates.  Overall PPI came in at 1.8% versus 0.8% and Core PPI came in at 0.5% versus 0.1% (up to 3.4% annual).  Traders initially sold off mortgage bonds on the news, but reality set in that producers can’t always pass these costs on to consumers and that much of the change was due to temporary factors. 

Retail Sales, the more important data play of the day, came in mixed.  The overall numbers came in at 0.6%, slightly above estimates of 0.5%.  However, excluding autos, Retail Sales came in at 0.3%, below estimates of 0.6%, indicating some weakness and that will play out favorable for MBS pricing, and mortgage rates.

With mortgage backed securities falling through the 50-day moving average, it may be better to go ahead and lock, especially if you cannot handle risk (then you should have been locking all along).  MBS opened down 22 basis points at the start on the heals of the data they fell another 31 basis points.  Now that the data has been digested, MBS pricing is on the rebound, the question is can they get back above their 50-day moving average and keep it from solidifying as resistance.

What does this mean for Florida Mortgage Rates?  Mortgage rates are higher this morning compared to yesterday, but they are on the rebound at the moment.  If they manage to improve a little more today, then lower mortgage rates are ahead.  If not, I will post again and inform you that locking is officially the best course of action again.

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