Rate Update December 11, 2009

Mortgage rates are mostly worse again this morning.

When you look at the chart of mortgage-backed bond prices over the past month the impact of the “flight-to-quality” trade that took place when Dubai announced it’s credit problems is evident.  The two days following Thanksgiving is when mortgage rates dipped to the lowest levels (MBS prices and interest rates work inversely with each other).

Since then mortgage rates have steadily crept higher has confidence in the economy improves.  This morning that confidence took another step higher after retails sales and consumer sentiment were reported much better than expected.  On the news stocks are trading higher and MBS’s are being pressured lower.

From a technical standpoint MBS’s have now broken through several layers of resistance.  We are going to maintain a locking stance until signs of stabilization appear.

Current outlook: locking