Florida Mortgage Rates – Morning Report

by Florida's #1 Mortgage Planner on August 4, 2009

Locking Stance: CAUTIOUSLY FLOATING    Mortgage Bonds: +19bp

Mortgage backed securities fell yesterday but ended the day slightly higher than when I made my report.  There was a brief “scare” when they broke below the 25-day moving average, but they managed to claw their way back up and close the day above this important level.

Today, we have already seen the most important piece of data, the monthly PCE (Personal Consumption Expenditures Index) which is the Fed’s favorite gauge of inflation.  Headline PCE was up 0.5%, and the Core PCE was inline with expectations of 0.2%.  The year over year rate for Core PCE was below the prior report, coming in at 1.5% and keeping inflationary fears in check.  Adding to the good news for MBS pricing (and mortgage rates) was the fact Personal Income was below expectations, coming in at –1.3% versus –1.1%, though Consumer Spending was slightly higher than expected at 0.4% versus 0.3%.  We will see the Pending Home Sales report at 10:00, though it likely will not affect the markets much.

Despite the good news in data, mortgage bond pricing has only moved up 19 basis points and is off their highs.  We are above the 25-day moving average, which keeps the future looking fairly good, but there are some negatives that can be seen in the charts as well, namely a potential negative crossover on the stochastics.  We also continue to see the 100-day moving average drifting lower, towards current pricing levels and the 25-day moving average is flattening out as the 200-day moving average continues to move higher, which sets up the potential for another negative crossover.  All in all, right now, MBS pricing looks fairly good for at least keeping mortgage rates steady, but the future may change that picture.

What does this mean for Florida Mortgage Rates?  Mortgage rates appear to be holding steady, possibly drifting lower, but the future outlook is becoming uncertain again.

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