Florida Mortgage Rates – Morning Report

by Florida's #1 Mortgage Planner on October 8, 2008

Locking Stance:  LOCKING     Mortgage Bonds:  +19bp

Mortgage bonds will be under some pressure today as we see the global efforts to stave off the worldwide financial crisis.  Central Banks across the globe made emergency rate cuts.

Australia cut yesterday by 1.00%, with the Federal Reserve, European Central Bank, and Bank of England each cutting by 0.50%, which brings our own Fed Funds Rate down to 1.50%.  The Bank of Canada, the Swedish Riksbank and the Swiss National Bank also cut rates, but the Bank of Japan sat out.  The Bank of Japan did endorse the rate cuts.

Whenever a rate cut occurs, typically what follows is a rally in stocks and a drop in bond pricing.  It also adds to the fears of inflation down the road, but since credit is tight, the hope is that inflation will not rise.  False hope? Maybe, but only time will tell for sure.

The only data slated for today is crude inventories and that will likely do nothing for the markets.  I am holding a locking stance as I think bonds will at least retest their 25-day moving average after the stock market opens.  For those of you willing to risk a little to see if mortgage bonds can hold on, floating may yet pay off.  If the 25-day moving average fails, things could get ugly quick.

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