Florida Mortgage Rates – Morning Report

by Florida's #1 Mortgage Planner on October 23, 2009

Locking Stance:  LOCKING    Mortgage Bonds: –16bp

Mortgage backed securities again managed a late day attempt to edge higher, and again they failed as they ended the day down slightly.  The charts are continuing their move over to a negative outlook for mortgage rates despite these attempts.  I will provide more technical analysis in just a bit, but let’s hit on today’s events.

Big Ben Bernanke was talking this morning, though the only thing he mentioned in his speech on the supervisory landscape at the Boston Fed’s Cape Cod Conference was "financial conditions have improved considerably."  He also called for policymakers to "take action to reduce the probability and severity of any future crisis," meaning more government control.  Essentially, he believes supports stronger capital standards and regulations should be reformed to prevent banks from becoming too big to fail.  Funny, these same banks probably should have been allowed to fail as happens in economic downturns which “cleanses” those types of scenarios naturally. 

Enough of that, here are the data plays to be had.  Wait, there is just one, Existing Home Sales, which is expected to climb slightly from last month to 5.350M.  We will see the results in about 30 minutes.  We also have Fed Vice Chairman Donald Kohn speaking at the Boston Fed’s Cape Cod Conference at 11:30, so if he says anything out of the ordinary, we may see market reaction as well.

On the technical side, we have a very interesting play happening.  There is a “vice grip” on MBS pricing right now as the 10-day moving average continues its nose-dive, and as I mentioned has the 50-day and 200-day moving average in its sights.  The latter two are attempting a positive crossover today, which will happen in all likelihood due to recent MBS prices and their momentum.  However, stochastic indications are negative and the breakout is almost certain to be to the downside, especially since current mortgage bond pricing is 8  basis points below this crossover already.  The 25-day moving average is also turning downward.  The only good sign is that MBS pricing has flattened out for the most part, remaining within this narrowing trading gap, though that cannot last much longer.

What does this mean for Florida Mortgage Rates?  Mortgage rates are again edging higher and the outlook remains most favorable for higher mortgage rates down the road.

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