Florida Mortgage Rates – Morning Report

by Florida's #1 Mortgage Planner on February 4, 2010

Locking Stance: CAUTIOUSLY FLOATING    Mortgage Bonds: +31bp

Mortgage backed securities fell 23 basis points yesterday, slightly higher than their lows, but today are making another attempt to break the sideways pattern that has formed, once again towards the positive side.  News today, along with data, has provided the boost.

If you remember yesterday, I mentioned that the nation’s debt load was forecast to reach the new (just authorized) cap by the end of February.  Well, today we see Standard & Poor’s issuing another warning that the US is in jeopardy of losing its Triple-A Credit Rating.  If you are not sure what that means, think of yourself applying for a mortgage and seeing your credit rating drop just before you close.  The result you see is being required to pay more interest, possibly not even being approved.  While the US will likely still be able to borrow money (or at least keep the printing presses running), the cost will likely run higher and creating more problems.  If you would like to hear my political views on the subject, let me know and I will get them up at Florida Mortgage Report, which has been taking an extended break.

Enough of talking debt and let’s get to data.  This morning saw another climb in Jobless Claims.  Jobless Claims were higher than expectations of 455K with the results coming in at 480K, bringing the 4-week moving average to 468.75K.  Continuing Claims are once again climbing which is another problem with our “recovering economy”.  This also brings into question exactly what tomorrow’s Jobs Jamboree is going to bring to the table.  Productivity and Costs was also released providing mixed data.  Productivity was below expectations of 7.0%, coming in at 6.2%, down from 8.1%.  Labor Costs were also reported below expectations, coming in at –4.4% versus –3.8%, helping ease inflation fears slightly.

For you “techies”, like myself, the charts are painting a picture that shows traders can’t decide which way to go, trapped in a fairly narrow range and trying to break out.  Today’s jump higher in MBS prices gets them above their 50-day, and even their 100-day moving averages.  Adding to the positives in the charts is the fact the 25-day MA is set to pierce through the 200-day MA in the next day or so.  That means that so long as MBS prices can hold above their 100-day MA, we may be seeing the beginning of an uptrend in MBS prices, meaning lower mortgage rates.  Stochastic indications remain in the overbought spectrum but are on the bottom side and allow for MBS prices to move higher as well.  It is still far too early to say we have broken into an uptrend, but I recommend floating for a bit just in case.

What does this mean for Mortgage Rates?  Mortgage rates are edging lower today and are showing a potential to keep going lower.  The outlook is still far from certain, but it is showing a better picture.

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