Florida Mortgage Rates – Morning Report

by Florida's #1 Mortgage Planner on April 23, 2010

Locking Stance: LOCKING    Mortgage Bonds: –19bp

I sometimes wonder why the mortgage rate alert services start the day out in a cautiously floating stance despite the writing on the wall, or rather in the charts.  I admit that I get it wrong sometimes, but hey, nobody is perfect.  Mortgage backed securities did exactly what the charts foretold was the most likely outcome, turning lower and driving mortgage rates higher.  I did not hit on the technical analysis yesterday, but I will shortly.

But first, data started off with the Durable Goods Orders report, which showed New Orders at –1.3%, below expectations of 0.4% and down from 0.5% last report.  That puts the year/year rate at 11.9%, which is actually up from 11.4% last report.  That news is favorable until you remove transportation from the equation.  Ex-transportation came in at 2.8%, up from 0.9% last report and is at 13.5% year/year, up from 8.5% last report.  Overall, a mixed bag of news leaning toward the unfavorable side for MBS prices.  New Home Sales came in at 411K, far exceeding expectations of 330K, and up from 308K.  One of the questions that still remains is whether or not these numbers will hold after the expiration of the homebuyers’ tax credits.

As promised, let’s get into the charts.  While the head and shoulders pattern I mentioned did not officially form, we have a double-top which is just as bearish for MBS prices.  Stochastic indications have turned negative and have plenty of room to fall as they were near the overbought spectrum.  The 100-day MA is now resting just 2 basis points above the 200-day MA, so a negative crossover is all but guaranteed now.  The 50-day MA continues to fall, and despite the positive crossover of the 10-day MA with the 25-day MA, MBS prices have gapped lower than both of these levels, which certainly is not good.  Just as important is the fact MBS prices are now below their latest “valley”.  Overall, we have a formal short-term trend change in place and we never did break the long-term downtrend.

What does this mean for Mortgage Rates?  Mortgage rates are struggling to maintain their ground today, which had them edge higher already.  The short-term and long-term outlooks are not fairly solidly pointing toward higher mortgage rates.

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