Florida Mortgage Rates – Morning Report

by Florida's #1 Mortgage Planner on May 12, 2010

Locking Stance:  LOCKING    Mortgage Bonds: –12bp

Once again the charts are skewed, this time due to the monthly mortgage bond rollover which was –40bp this month, causing the charts to show –12bp instead of up 28bp.  Additionally, it added the first red candle after 8 straight green ones (would have been 9 straight).  So, why the change of stance?  Well, I will get into that later, but first we will hit on today’s events.

We have yet another day of generally minor impacting data plays to look at.  The MBA Purchase Applications showed purchase applications dropped 9.5% after the end of the second-round of housing stimulus.  (Now the rush to close before the end of June is on, which could get interesting.)  Refinance applications jumped 14.8% and that drove the composite index up 3.9%.  Overall, the housing recovery remains a big question mark.  The International Trade report showed the Trade Balance Level at $-40.4B, just above estimates of $-41.0B and down from $-39.4B revision last report, with the main culprit being oil.  Still to come is the Crude Inventories report, due out shortly.  We also have Boston Federal Reserve Bank President Eric Rosengren moderating discussion on macroprudential supervision at the Atlanta Fed’s annual Financial Markets Conference in Atlanta and St. Louis Federal Reserve Bank President James Bullard will give an economic update to the Tennessee Dept. of Financial Institutions in Nashville (1:15).  The main event today, however, will be the Treasury Auction of the 10-year T-Note which we will see the results of at 1:00.

That brings me to the reason of the stance change.  Yesterday’s auction did not see strong results like we have been seeing in the past and that trend could continue in today’s auction.  If it does, MBS prices could begin to falter and we may see the beginning of a new trend, one not favorable for low mortgage rates.  The charts are still not showing a clear direction yet, with several positive indications, and some negative.  Overall, it looks good, especially with the charts being skewed.  However, while I think there is a good chance (right now) for MBS prices to rebound, I think the chances are good we will see them move lower this afternoon, and possibly enough to change the outlook.

What does this mean for Mortgage Rates?  Mortgage rates are remaining fairly steady right now, but that could change, for better or worse, this afternoon.  I may end up being wrong, but I think mortgage rates will likely edge higher, at least for the short-term.  The long-term outlook remains unclear for the moment.

Leave a Comment

Previous post:

Next post: