Florida Mortgage Rates – Morning Report

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

Locking Stance:  LOCKING    Mortgage Bonds: –38bp

Mortgage backed securities had a good day yesterday and managed to edge out more gains from my update yesterday morning before falling back down, ending the day up only 25 basis points.  This morning shows you why I remained in a locking stance and why I did not like what the charts were showing.

The data started flowing this morning and the second set of numbers coming in were the biggies of the day, Retail Sales.  Retails Sales was expected to come in at –2.1%, but was actually only –1.5%.  Since the reason for the expected drop was mostly due to a dropoff in car sales as the “Cash for Clunkers” incentive ended, expectations of Retail Sales less autos was for a 0.3% increase.  However, removing autos from the equation actually showed a 0.5% increase instead.  This is certainly not good news for mortgage bonds.

Other data today so far were MBA Purchase Applications and Import and Export Prices.  MBS purchase applications showed a drop of 5.0% in Purchase Applications and a drop of 0.1% in Refinance Applications as average mortgage rates edged back above 5% to 5.02%.  Certainly not helping MBS prices today, the Import Prices are proving that the weak dollar is increasing inflation pressures, something I have talked about many times before, including in this post over at Florida Mortgage Report.  However, if you look at the headline numbers, they appear to be tame.

As for the charts, they are now looking worse than yesterday.  Mortgage backed securities, namely the FNMA 4.5% Coupon mortgage bond, has broken below their 25-day moving average and are now resting at their 200-day moving average, possibly breaking through as the week continues.  The current level of MBS prices is just below the bottom of that potential sideways trading pattern I had talked about, but the indications are that we are more likely heading into a downtrend than actually moving sideways.  The quick translations is that odds favor higher mortgage rates going into the future unless things change later today.

What does this mean for Florida Mortgage Rates?  Mortgage rates are edging higher again, as expected.  The outlook is still not entirely clear, though the pendulum is definitely swinging to favor higher mortgage rates.

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