Florida Mortgage Rates – Morning Report

by Florida's #1 Mortgage Planner on June 10, 2010

Locking Stance: LOCKING     Mortgage Bonds: –34bp

Well, as I have been saying, that "rubber band” was stretched too thin and required a “snapback”.  It appears we are beginning the next corrective move, which may set up a new pattern.  I have been saying mortgage rates are going to be going back up, but I still think that is a ways off and we may see mortgage rates come back to these new lows in the near future, though it is too early to be certain.  I will get into the technical analysis in a bit, but let’s hit on data released today and Big Tim’s speech. 

Interestingly enough, Jobless Claims actually favored mortgage backed securities.  Jobless Claims came in at 456K, down 3,000 from last week’s revised higher report (+6,000).  It was worse than the consensus of 448K and the 4-week moving average rose to 463K, certainly not pointing to a recovery in the jobs market, though Continuing Claims dropped steeply to 4.462 million, the lowest level since late 2008.  In the International Trade report, the Trade Balance Level was reported slightly better than expectations at $-40.3B).  Treasury Secretary Tim Geithner is testifying on US-China relations to the Senate Finance Committee in Washington, hitting on the need for China to reform its exchange rate of the Chinese Yuan.

Looking at the charts, once again we see a nice picture overall, however the corrective move, or retracement has finally begun and will likely pullback to just below the 10-day moving average, which will be required to have a solid move. Stochastic indications back this up as they are bouncing off the top of their chart, showing they are still well into the overbought spectrum.  We have also had a very steady rise for a long time and have not seen any moving averages turn lower for a long time, not even a brief period in the 10-day moving average.  This points to strength, however it is not a typical pattern for this length of time.  Keeping in mind the current herd movement into “safe havens”, this is not unexpected, but begs to question when will it end, and what will happen when it does.  You also need to keep in mind that at these levels it takes longer moves to get mortgage rates to edge lower, thus skewing the risk/reward ratio in favor of locking as I have been mentioning. 

Are lower mortgage rates still possible? Simply put, yes.  Will they? Maybe, only time will tell for sure.  Is it wise to float right now?  Not for at least the next few days to a week and then we’ll see.

What does this mean for Florida Mortgage Rates?  Mortgage rates are finally edging higher and likely will do so for at least a little while.  The long-term outlook is that mortgage rates may return to these levels down the road, but that picture is still not certain.  That picture may change next week.

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