Florida Mortgage Rates – Morning Report

by Florida's #1 Mortgage Planner on September 12, 2008

Locking Stance:  CAUTIOUSLY FLOATING     Mortgage Bonds:  -16bp

It is always a little troubling when favorable data is released and the markets move lower.  I think many traders are still trying to figure out where the markets should be after the week started with the Fannie and Freddie takeover.

PPI was reported lower than expected, good news for the inflationary expectations side of the markets, and for mortgage backed securities as a whole.  While overall PPI dropped more than expected, it is important to note that core PPI came in inline with expectations, so we are not “out of the woods” so to speak.

As I mentioned yesterday, Retail Sales was favorable, meaning worse than expected.  Some of that had to do with the drop off in stimulus checks as they have virtually all been received at this point.  Remove autos from the equation and things look even worse for Retail Sales.

Mortgage bonds have already started their motion sickness day, having dropped, climbed, dropped again.  Currently they are down 16bp, but may make another move higher.  For those that can stomach the volatility or just go with the flow of what I talk about, floating may be the better option despite bonds being down right now.  With favorable news, and the fact lenders are pricing at about the -16bp level already, unless bonds falter further, we should see no worse pricing, probably better, later today or Monday.

I will, of course, get back with more information and updates later and change my stance if bonds do falter considerably more.  With favorable data, I don’t think that is very likely.

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