Florida Mortgage Rates – Morning Report

by Florida's #1 Mortgage Planner on March 25, 2010

Locking Stance: LOCKING    Mortgage Bonds: -6bp

Mortgage backed securities dropped like a rock yesterday, falling a total of 88 basis points by the end of the day.  Not to sound egotistical, but I have to laugh at the advertisements that came out from rate alert services that headlined “How badly were you hurt by today’s MBS price collapse?” or something.  What you should also ask is “How much were you hurt by their advice?”, which is why I laugh because these are the same people that ask “How much is free costing you?” yet if you followed my advice, or even a combination of theirs and mine, you would have actually saved your clients a lot of money.  The reality is you would have locked all of your clients two days ago at the latest and not lost money with the pre-market opening dip that resulted while they had you floating still.

OK, so can we expect today?  Well, today is yet another Treasury Auction, this time an even longer term with the results of the 7-year T-Note being released at 1:00.  Since the trend is that the longer the term the security is, the worse the results, we can expect MBS prices to hold steady or fall.  The reason the may hold steady, maybe even increase, is because traders are likely already factoring in a dismal performance for today.  If we see stronger than expected results, we may see the retracement that is now required begin to take place.  As I mentioned yesterday, the charts were looking really ugly, and after yesterday, they are even worse, so beyond a retracement, don’t expect lower mortgage rates.

Data today started with the weekly Jobless Claims, which were reported at 442K, slightly better than expectations of 450K and improving the 4-week moving average to 453.75K.  Normally, this would send MBS prices lower, but traders are more focused on this afternoon for the reasons I already mentioned above.  Cleveland Federal Reserve Bank President Sandra Pianalto made a speech to the Bonita Springs Chamber of Commerce Market Pulse event at Florida Gulf Coast University, Bonita Springs, Florida where she discussed her concerns of long term unemployment and the cautiousness of the consumers and businessmen affecting the economic recovery.  Federal Reserve Chairman Ben Bernanke is testifying to the House Committee on Financial Services about the Fed’s exit strategy.  Remember that not only are they ceasing to purchase their $1.25 trillion in MBS, but they have to sell it as well, so this will play a role in rising mortgage rates as well as the chief purchaser is no going to become the chief seller over time.  Treasury Secretary Tim Geithner willl testify to the House Appropriations Committee’s State and Foreign Operations Subcommittee Treasury’s international programs this afternoon and don’t forget about the 7-year T-Note results coming at 1:00.  Volatility is likely.

What does this mean for Mortgage Rates?  Mortgage rates are on the rise and with exception of a corrective move, lower rates are likely a thing of the past.

(Note: Don’t forget MBS Commentary is up and running as well and will offer more consumer and mortgage pro advice than just these daily reports)

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