Florida Mortgage Rates – Morning Report

by Florida's #1 Mortgage Planner on August 26, 2009

Locking Stance: LOCKING    Mortgage Bonds: +6bp

Mortgage backed securities actually faired very well yesterday despite the negative data, showing strength that was hidden from the charts.  They ended the day up 19 basis points and resting on their double resistance layer of the 200-day and 100-day moving averages.  If you have read my previous reports, you know that the top of the “squeeze play” going on right now is the 100-day moving average, so if MBS pricing can break out above, the long term downtrend may be over.  Will it happen, or will mortgage bonds succumb to resistance once again?

Almost all of this morning’s data has been released and we have some interesting reactions in the markets so far.  The benign MBA Purchase Applications report showed that purchase applications rose 1.0%, bur refinance applications jumped 12.7% for their third straight gain while mortgage rates held fairly steady, the national average only ticking up 9 basis points to 5.24%.  Durable Goods Orders sometimes throws a wrench into the markets and this morning’s report beat expectations, coming in at 4.9% versus 2.5%, but remove transportation and it was only 0.8%.  It appeared the market really didn’t know what to make of the report and very little reaction was seen, though they may have been waiting for the New Home Sales report.  New Home Sales came in better than expected, continuing the trend and reaffirming the housing market may be bouncing off its bottom.  New Home Sales were 433K versus expectations of 390K and were above even the highest part of the consensus range. 

Crude inventories will be out at 10:30, but the next big market mover will likely be this afternoon’s 5-year T-Note Auction.  With yesterday’s 2-year T-Note Auction being adequate enough to give mortgage bonds some strength, today’s auction could give them the boost they need to break free, though a weak auction could send them crashing just as easily.  We also have Dennis Lockhart speaking at 11:30 up in Tennessee to the Chattanooga Area Chamber of Commerce.

On the technical side, we have MBS pricing trying to break through their overhead resistance, and are currently above that level now.  That is good news because the 100-day moving average just dipped below the 200-day moving average, a very negative sign usually, but this move may negate that signal, that is if they can hold on.  Stochastic indications are back in the positive, though they have also moved into the overbought spectrum at this time, providing a bit of a mixed signal, though their is room for higher movement.  Another positive sign is that the 25-day moving average has remained above the 50-day moving average (though only by 3 basis points), so another negative signal was fought off, at least for now.

What does this mean for Florida Mortgage Rates?  While mortgage rates have showed improvement, today will be a critical day.  If they can edge lower, lower mortgage rates may again be in the future, but if they fail to move lower, mortgage rates will definitely be back on the rise.

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