Florida Mortgage Rates – Morning Report

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

Locking Stance: CAUTIOUSLY FLOATING    Mortgage Bonds: +12bp

It appears the correction has begun as MBS prices closed up about 25 basis points yesterday despite Minneapolis Federal Reserve Bank President Narayana Kocherlakota’s comments that the Fed needs to start looking into a slow, steady period of selling their MBS holdings, approximately $20B per month.  Remember what I have been saying that the Fed ceasing their MBS purchase program is not the only problem, but also that they will need to sell their MBS holdings as well.

Yesterday’s Treasury auctions saw the continued trend of lower bid/cover ratios and higher yields.  That being said, the auctions were still seeing decent demand and the 3-year T-Note’s auction results were strong, holding its own in bid/cover, though yields did climb.  MBS prices were given a green light to climb after those results and the continued and the FOMC Minutes aided as they calmed the inflation outlook.

Today’s data started with the weekly MBA Purchase Applications report, which showed a slight gain in Purchase Applications, up 0.2%.  The report also showed refinance applications dropped another 16.9% as the 30-year loans average mortgage rate jumped to 5.31%.  Of course, the MBA is blaming the jump on the Fed’s termination of its MBS purchase program.  Crude Inventories came in at 2.0M barrels, though some underlying numbers indicate the potential anticipation of stronger demand down the road.  

Later today, we will see New York Federal Reserve Bank President William Dudley speak to The Economic Club of New York (12:15), Federal Reserve Chairman Ben Bernanke speak on "Economic challenges: Past, Present and Future" to the Dallas Regional Chamber (1:30), and Kansas City Federal Reserve Bank President Tom Hoenig address meeting of the Denver branch board of directors meeting in Santa Fe, New Mexico (2:00).  Data this afternoon will be Consumer Credit at 3:00, but the big event for the remainder of the day will clearly be the 10-year T-Note Auction, the results of which will be released at 1:00.

What does this mean fro Mortgage Rates?  Mortgage rates edged lower since yesterday, signaling the likely beginning of the short-term lower mortgage rate outlook I discussed before.  The long-term outlook remains most favorable for higher mortgage rates, so be ready for the change.

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