Florida Mortgage Rates – Morning Report

by Florida's #1 Mortgage Planner on November 18, 2009

Locking Stance:  LOCKING    Mortgage Bonds:  +3bp

I am still holding that locking stance and the main reason is that we have yet to see a genuine retracement, leaving a lot of concerns about where mortgage rates are headed right now.

Today’s data included one of the big ones, the CPI (Consumer Price Index), along with some news on the housing market.  First off, MBA Purchase Applications was released and showed Purchase Applications continued to drop, and is now at the worst reading since 1997 (the beginning of the housing bubble).  Refinance Applications are even dropping off, down 1.4%, despite mortgage rates hitting rock bottom at an average of 4.83% for 30-year loans.  That all points to a weakening housing market, and the idea that we have not truly seen the bottom of housing yet, which was confirmed by the Housing Starts report.  Housing Starts were at 529K, down from 590K and well below the consensus of 600K.  Housing Permits also dropped from 573K to 552K.  Will it spark up again with the extension of the tax credit?  Time will tell.

But the big report is that of the CPI, at least it is typically the most impactful.  And guess what happened?  Yes, inflation came in a little higher than expected at 0.3% versus 0.2% and brings the year over year back up to –0.2%.  Take out that volatile food and energy and you still have it higher than expected at 0.2% versus 0.1% and that brings the year over year up to 1.7%.  The PCE (Personal Consumption Expenditures Index) report will be a major player, especially if it comes in higher than expectations.  PCE is due out next Wednesday and mortgage rates may not have anything to be thankful for this Thanksgiving.

On the technical side, MBS prices have rebounded from their initial opening drop, but as I said, that retracement still is not complete, so MBS prices should continue to fall, even below their rising 10-day MA.  The only report remaining this morning is Crude Inventories, and that is not likely to shape the mortgage bond market much.   Stochastic indications have turned negative and are now allowing a little breathing room as they move out of the overbought spectrum, but they remain in a dive.  That’s a good sign that we will have that retracement and then likely move higher again.

What does this mean for Florida Mortgage Rates?  Mortgage rates are likely to hold steady from this morning, though the short-term trend is for higher mortgage rates.  The longer-term is for steady and possibly lower mortgage rates from their current levels, though that is not guaranteed at the moment.

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