Florida Mortgage Rates – Morning Report

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

Locking Stance: CAUTIOUSLY FLOATING    Mortgage Bonds: +22bp

Mortgage backed securities had yet another horrific day in a virtual freefall.  By the end of the day, they were off their lows slightly, closing down 56 basis points, and down 150 basis points in the last three trading sessions.  That big of a move makes another retracement a requirement and this “dead cat bounce” appears to have begun today.

Data is what is helping MBS prices recover some today.  MBA Purchase Applications showed a 11.6% decrease in Purchase Applications and a 10.1% decrease in Refinance Applications.  But hey, that was last week and this week will likely be worse, especially with it being the Christmas week.  New Home Sales was well below expectations of 440K with a mere 355K result.  That marks an 11% drop in November.  Crude Inventories showed at –4.9 M barrels and Consumer Sentiment was a little below expectations of 73.5 with a 72.5 result.  But hey, those weren’t even the big report of the day, which was PCE. 

Inflationary concerns have been rising and this morning’s PCE report is the biggest inflation player as it is the Fed’s favorite gauge of inflation.  This morning’s Personal Income and Outlays data showed Core PCE at 0.0%, just below the expected 0.1%.  That puts the year over year Core PCE at 1.4%, comfortably below the Fed’s target range of 1.5-2.0%.  Personal Income rose 0.4%, bringing its year over year rate to –0.3%.  Consumer Spending rose 0.5%, bringing its year over year rate to 2.3%.  With numbers like these, one can see why mortgage bonds are trading higher today.

Looking at the charts, we have seen a huge move lower, so a “bounce” is expected, likely back up to their 200-day MA.  That being said, caution must remain as weakness still rules the markets and that can be seen by MBS prices falling from their highs despite the calm inflation reading.  Stochastic indications are now back in the oversold spectrum signaling the need for that bounce.  Virtually all moving averages have turned lower as well.

What does this mean for Florida Mortgage Rates?  Mortgage rates have risen considerably over the last few days and we appear to be starting another brief floating period if you failed to lock already.  The overall outlook continues to favor higher mortgage rates.

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