Florida Mortgage Rates – Morning Report

by Florida's #1 Mortgage Planner on January 6, 2010

Locking Stance: LOCKING    Mortgage Bonds: +9bp

Mortgage backed securities had a nice run yesterday, ending the day up 50 basis points.  Also yesterday, I found out what happened over at Lenderama, which was sold to a new company and is being redesigned.  Apparently in the process, this week’s post was lost and I have no backup copy of it.  Nevertheless, MBS prices are doing almost exactly what I have predicted thus far for this week and have now completed the 50% retracement I have been expecting.  That means they can fall from here, even if not making it to their 200-day MA level, though they are trying hard to get there (just 2bp below).

Today’s data plays thus far have been the MBA Purchase Applications (covering the last two weeks) and the ADP Employment Report, the latter being a major player these days.  The MBA Purchase Applications showed Purchase Applications rose 3.6% last week after falling 4.0% the week prior.  Refinance Applications fell 1.6% after falling steeply (30.5%) the week prior as 30-year mortgage rates rose to 5.18% (old news).  I guess there are no more happy homeowners.  This month’s ADP Employment Report forecasts the Nonfarm Payrolls to come in at a respectable –84,000.  MBS prices are not reacting much as current estimates are for 0.  Yes, you read it right, 0.  Traders are cautious, though, as last month’s ADP Employment Report forecasted payrolls at   -169,000 but they were only –11,000 and that means we could still see a major miss higher again this month.  Be ready for it if it happens.

We will also see the ISM Services Index at 10:00, Crude Inventories at 10:30 and the “Fed Unplugged” (FOMC Minutes) at 2:00.  There are no more Treasury auctions this week, but tomorrow’s Treasury Announcements may weigh heavily on the mortgage bond market as more supply floods the markets.

Looking at the charts, MBS prices are higher this morning, attempting to reach that 200-day MA.  Stochastic indications have now moved out of the oversold spectrum, allowing opportunity for the resumption of the downtrend.  The 25-day MA is currently crossing below the 100-day MA, another negative sign.  The 200-day MA has also turned lower in the last two weeks.  The bottom line is it looks as though MBS prices will get to their 200-day MA, but then turn lower and resume the downtrend.  That is unless something major happens to reverse the course, which could happen on the fact Senator Christopher Dodd is expected to retire (maybe the lunacy will stop?).

What does this mean for Florida Mortgage Rates?  Mortgage rates will likely hold steady today, improving slightly from yesterday, but today may be the last day for mortgage rates this low.  The overall trend remains intact for higher mortgage rates moving forward.

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