Florida Mortgage Rates – Morning Report

by Florida's #1 Mortgage Planner on May 19, 2010

Locking Stance: CAUTIOUSLY FLOATING    Mortgage Bonds: +12bp

As mentioned yesterday, I thought those alerts to lock on Monday were premature and they were.  Mortgage backed securities managed to get back to the same pricing levels yesterday and are trying to push even higher today.  As seems to always be the case in today’s marketplace, there are some concerns though being patient may pay off.

The big news on the data side was the Consumer Price Index, or CPI, which headlines inflation and since inflation is the archenemy of MBS prices (and mortgage rates), this report weighs heavy on the markets.  This morning’s CPI report showed overall CPI at –0.1% month/month, below estimates of 0.0%, and the year/year was at 2.2%, down from 2.4%.  Even looking at the Core CPI (excludes food and energy), we saw drops as Core CPI was at 0.0% month/month, below expectations of 0.1%, and the year/year was at 1.0%, down from 1.2%.  Inflation is obviously not an issue, at least for the moment.  MBA Purchase Applications showed a slight drop in the Composite Index, down just 1.5%.  However, the underlying story shows some real concerns for the housing market as Purchase Applications fell 27.1% now that the tax credits are expired.  Refinance Applications rose 14.5% as mortgage rates pushed lower and that is what is skewing the composite.  Still to come today is the FOMC Minutes, which could alter the markets a bit (likely in favor of MBS prices) and Crude Inventories, which doesn’t usually have a major impact on the markets. 

Looking at the charts, the short-term outlook still remains fairly strong for MBS prices to attempt a continued climb.  The long-term outlook is also looking pretty good for at least a sideways pattern, if not an uptrend.  Stochastics appear to be weakening a bit, though they still point to higher MBS prices.  At this point, all moving averages are in a climb, though the 200-day MA remains fairly flat.  We may see some more positive signs shape up in the coming days if MBS prices can edge slightly higher.

What does this mean for Mortgage Rates?  Mortgage rates will likely edge lower today and the short-term outlook remains good, though be ready in case things change.  The long-term outlook is clearing up nicely in favor of mortgage rates holding fairly steady, if not moving lower.

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