Florida Mortgage Rates – Morning Report

by Florida's #1 Mortgage Planner on December 31, 2009

Locking Stance: LOCKING    Mortgage Bonds:  -22bp

Mortgage backed securities are down today, but they are well off their lows as well.  We have not seen a solid retracement yet, so we should still see MBS prices move higher to complete that corrective move before they continue lower.  That being said, we remain in a holiday shortened trading week with increased volatility and certainly not a “perfect world” as we saw last week a drop after a mere “pause”.  As with any time, if you worry about MBS price fluctuations, you should always be locking because major moves lower like this morning will stress you out even though they bounce back.

Just as we saw yesterday, the further we move into the week, the stronger the Treasury auction results and yesterday’s 7-year T-Note auction saw the strongest results this week.  The reason for the drop in MBS prices this morning was the better than expected Jobless Claims report which came in at 432K versus estimates of 460K.  Adding to that was the fact the Labor Department is not warning about any holiday adjustment factors.  The news is certainly not favorable to mortgage bonds.  It will be interesting to see how MBS prices begin 2010, but it is clear we remain in a solid downtrend with mortgage rates moving higher and higher.  Thank God for the tax credits?

Looking at the charts, the short-term should still offer a corrective move lower but with MBS prices turning lower today after showing weakness yesterday, this last edge higher may be like lat week’s “pause”.  The 25-day MA has now crossed below the 50-day MA, a major negative sign and it is clear we are in a steep downtrend still in the short to medium trend and still a solid downtrend in the long-term outlook.  The next negative signal will be the 25-day MA crossing the 100-day MA which may happen next week if we do not see MBS prices stabilizing.

What does this mean for Florida Mortgage Rates?  Mortgage rates edged higher this morning for may lenders, but rates are rebounding as the day progressed.  Without a solid move lower, we should still see slightly lower mortgage rates in the short-term, though it is clear that the long-term outlook remains most favorable for higher mortgage rates.

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