Florida Mortgage Rates – Morning Report

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

Locking Stance: LOCKING    Mortgage Bonds: –10bp

Mortgage backed securities managed to end the day down only 19 basis points and relatively flat since they opened.  However, they were down and that left the long term downtrend well intact and reinforces the resistance of the 100-day moving average, which is the top of the “squeeze play”.  MBS prices are testing the floor of that range, and may even break below it today, though it has held thus far with mortgage bonds bouncing off their lows.

All of the data for today has been released, which included the Personal Income and Outlays report and Consumer Sentiment.  Inflation remains tame with Core PCE coming in at 0.0% (versus 0.1% expected) and year over year was 1.4%.  Personal Income was also in check with a showing of 0.0% versus 0.1% as well and –2.4% year over year.  Consumer Spending came in below expectations at 0.2% versus 0.3%, though it is up 1.1% year over year.  Consumer Sentiment was just released and came in at 65.7, beating expectations of 64.0.

On the technical side of things, we have stochastic indications attempting that negative crossover again, right on the edge of the overbought spectrum.  The 100-day moving average has prevented mortgage bonds from climbing higher and bringing lower mortgage rates for months on end now, with the only saving grace right now being that the double support of the 25-day and 50-day moving averages is keeping the squeeze play on.  MBS pricing is now in the middle of the trading range between the two sides, hugging the 10-day moving average.

What does this mean for Florida Mortgage Rates?  Mortgage rates are again on the rise and will likely continue that trend for the foreseeable future.  Simply put, in the current environment the risk/reward ratio is too high.

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