Florida Mortgage Rates – Morning Report

by Florida's #1 Mortgage Planner on January 7, 2010

Locking Stance: LOCKING    Mortgage Bonds: 0bp

Mortgage backed securities had an interesting day yesterday as they closed the day down 22 basis points, but just about in the middle of the trading range for the day.  They have already dropped to their 10-day MA and have bounced off today, so it will be interesting to see if they can find a way to muster strength and break this downtrend, though I doubt it.

Yesterday’s ISM Services Index came in just below expectations of 50.4 with a showing of 50.1, so certainly not bad news for MBS prices.  The highlights of the FOMC Minutes showed the Fed agreeing the economy is improving, strengthening in the fourth quarter with companies cutting back on the layoffs, though few firms have begun to hire again, except for maybe temps.  The Fed is in somewhat disagreement about the future of MBS purchases, with a few members saying it may need to be expanded and beyond the first quarter with only one saying the Fed should begin to sell its assets if the recovery gains strength.  Overall, with several Fed members thinking of expanding the MBS purchase program, MBS traders were happy as the “bubble” may get re-inflated.

As for today, the weekly Jobless Claims has been released.  Jobless Claims rose to 434K, but were below expectations of 450K, so overall not favorable for mortgage bond pricing.  The four-week average dropped 10,250 to 450,250, which is its lowest level since September.  Continuing claims also dropped, down 179K to 4.802M.  Looking at the charts, the trend still is solidly improving.  There are no other major data plays today, but we do have the Treasury Announcements of upcoming auctions.  The 30-year T-Bond announcement, earlier scheduled for 9:00, is now pushed back to 11:00 and will be released at the same time as the others, which include the 3-year and 10-year T-Note announcements.  The added supply may weigh heavily on MBS prices, especially as stochastics are indicating a drop in MBS prices is likely.

What does this mean for Florida Mortgage Rates?  While mortgage rates are trying to improve today, the outlook remains most favorable for higher mortgage rates and rates may be on the rise after 11:00.

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