Florida Mortgage Rates – Morning Report

by Florida's #1 Mortgage Planner on July 7, 2010

Locking Stance:  CAUTIOUSLY FLOATING     Mortgage Bonds:  +12bp

Mortgage backed securities made a nice turn around yesterday afternoon and broke free of resistance, this time actually holding above the first layer of resistance providing our first genuine clue of strength in a while.  This morning, they are breaking above the second layer of resistance and while there remain concerns over their ability to hold above this level, we are now seeing what appears to be the resumption of the uptrend, or at least an attempt at it.

Not a whole lot happened yesterday, but besides the ISM Non-Manufacturing Index showing a weakening economic recovery, the 3-month and 6-month T-Bill auctions went very well despite increased sizes.  That shows the continued strong demand for “safety” investments and provided a boost for MBS prices as well.  Stocks, which had driven higher out of the starting gate, fizzled out and even went negative for a bit as oil and gold turned lower as well.  As the money flowed out of stocks, mortgage bonds benefited.  But beware, this “strength” may not be solid enough to keep MBS prices at these levels and stochastic indications remain overbought and generally favoring a move lower.  I still have that itchy trigger finger on the lock button, but I just cannot overlook what happened yesterday.

MBA Purchase Applications was released this morning and showed another drop (-2.0%) in Purchase Applications, though Refinance Applications rose (+9.2%).  Low mortgage rates continue to pull in homeowners into refinance mode, but clearly demand for purchases is not rebounding and will likely spill over into home prices as well.  We saw the weekly store sales reports, both slightly higher on a year/year basis but typically don’t play a role in the markets.  This afternoon will see the Treasury STRIPS report, but it does not typically impact the markets either.  Not much else on the docket today, just the 4-week T-Bill auction and the following Fed speeches:

  • (3:30) – Minneapolis Federal Reserve Bank President Narayan Kocherlakota speech on taxing risk at the Society for Economic Dynamic meeting in Montreal.
  • (7:15) – Richmond Federal Reserve Bank President Jeffrey Lacker speech to Hampton Roads business leaders in Norfolk, Virginia. Media Q&A to follow.

What does this mean for Florida Mortgage Rates?  Mortgage rates managed to edge lower yesterday and may be able to do so in the coming days, but there remains some concerns surrounding their ability to do so.  If things hold up, the long-term outlook will once again point to lower mortgage rates.

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