Florida Mortgage Rates – Morning Report

by Florida's #1 Mortgage Planner on March 24, 2010

Locking Stance: LOCKING    Mortgage Bonds: –28bp

Well, you can clearly see why I have maintained that locking stance and you can see that what I have been waiting for finally happened.  OK, what you may not have seen if you are watching closely is what I talked about before and will get into in more detail as I cover the technical analysis later on.

Mortgage backed securities started to fail yesterday, just as I discussed in yesterday’s Morning Report.  The 2-year Treasury Note Auction’s results came in rather mediocre and that spooked traders a little and caused MBS prices to falter, ultimately closing well below their prior peak even though they were up 3 basis points.  More on those implications later, but you can expect more of the same today.  We are also seeing concerns over our relations with China and since they are again the leaders in our debt holdings, this could play out poorly for mortgage rates.

Data released this morning included MBA Purchase Applications and Durable Goods Orders with New Home Sales and Crude Inventories to go, along with the 5-year T-Note auction’s results this afternoon.  We will also be seeing two Feds speaking today, Kansas City Federal Reserve Bank President Tom Hoenig speech on the Financial Foundation for Main Street at the U.S. Chamber of Commerce Center for Capital Markets Competitiveness in Washington and Federal Reserve Vice Chairman Donald Kohn speaks in Davidson, N.C. on "Homework Assignments for Monetary Policymakers."  MBA Purchase Applications showed Purchase Applications rose 2.7% while Refinance Applications fell 7.1% with the average 30-year mortgage rising 10bp to 5.01%.  The data sending MBS prices lower this morning was the Durable Goods Orders, which showed New Orders at 0.5%, below expectations of 1.0% and down from 3.0%, though this 3.0% was revised up to 3.9%.  Excluding transportation, the numbers were 0.9%, up from –0.6%.  While some numbers look favorable to MBS prices, the overall report leaves traders with the feeling that the data was inline with expectations, and not worse, and traders are becoming more skeptical about today’s 5-year T-Note auction’s results.

Now for the technical analysis I mentioned at the beginning.  The charts are once again turning ugly to say the least.  With MBS prices failing to hold their ground yesterday, the desired sideways pattern is now in question and it appears we have developed more of a slow downward trend in MBS prices (mortgage rates creeping up over the long run).  That is the pattern I discussed could happen in the past, though I have not mentioned it in a while.  Stochastic indications still favor MBS prices falling.  MBS prices have plowed thorugh (below) their 100-day MA, their 10-day MA, their 25-day and even their 50-day MAs.  All four of these support layers are currently failing this morning, and that is not the momentum we need if we want to see mortgage rates remain low.

What does this mean for Mortgage Rates?  Mortgage rates are again on the rise and the outlook is becoming clearer that higher mortgage rates are coming in the long run.

(Note:  MBS Commentary is running this same post and is being developed as a better site for both consumers and mortgage professionals to go to see my forecasts.  Also, for mortgage pros, I highly recommend reading my reports as I do not focus on just the daily aspect and my accuracy exceeds that of rate alert services when analyzing the overall picture.  Case in point is if you have been floating the last few days, you lost a lot of money for your clients this morning.)

Leave a Comment

Previous post:

Next post: