Florida Mortgage Rates – Morning Report

by Florida's #1 Mortgage Planner on June 24, 2010

Locking Stance: LOCKING    Mortgage Bonds: 12bp

Mortgage backed securities made several attempts at their upper resistance level and that level is holding solidly right now.  The Fed decided to keep the Fed Funds Rate unchanged , with just one Fed voting against.  Kansas City Fed President Thomas Hoenig "believed that continuing to express the expectation of exceptionally low levels of the federal funds rate for an extended period was no longer warranted because it could lead to a build-up of future imbalances and increase risks to longer-run macroeconomic and financial stability, while limiting the Committee’s flexibility to begin raising rates modestly."  The Feds also continued with their tame inflationary outlook and changed their statement to reflect financial conditions that "have become less supportive of economic growth on balance, largely reflecting developments abroad. Bank lending has continued to contract in recent months."  One of the reasons for yesterday’s lack of stellar improvements was the fact the 5-year T-Note auction went poorly with weak buyside demand.

Data today started with Durable Goods Orders, which showed New Orders at –1.1%, below expectations of –0.5%, bringing them to 14.9% year/year.  Take out transportation and we see 0.9% and 17.6% year/year.  Overall, a fairly benign report when it comes to market movement.  Jobless Claims were reported slightly better than expected at 457K and the 4-week moving average dipped slightly to 462.75K (down just 0.75K).   The prior week’s numbers were revised higher by 4K, making the improvement at 15K from the prior week.  Not much else going on the remainder of the day except the 7-year T-Note auction at 1:00.  If it goes as bad as yesterday’s 5-year T-Note auction, expect MBS prices to deteriorate.  With the upper resistance level holding, MBS prices will need a strong result here or they will likely falter.  I am betting we are at the new top, at least for now.

What does this mean for Florida Mortgage Rates?  Mortgage rates appear to have improved about as much as they can right now, so the risk/reward ratio is back to unfavorable.  The short-term outlook points to mortgage rates edging at least slightly higher.  The long-term outlook remains favorable for fairly steady mortgage rates at this point, but we are likely on the lower side of that range.

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