Rate Update June 2, 2009

Fixed Mortgage Rates are up from yesterday

Mortgage Backed Bonds have continued to trade lower this morning but are getting close to the 200 day moving average. This 200 day moving average is the floor of support that bonds bounced off late last week before starting it’s recent free fall. There is about another 60 basis points between current levels and the 200 day moving average so a locking stance for short term deals is still safe, however if bonds can bounce off the 200 day moving average again, we should see some rate improvements to follow.

At this point, I don’t think that it is a sure thing that bonds will be able to bounce off the floor of support however. Supply is still going to be a big factor on Mortgage Backed Bonds in the near future as three separate auctions are scheduled for next week alone. Even with the Fed purchasing Mortgage Backed Securities, and China having a healthy appetite for the debt it has still not been enough to outweigh the amounts of supply hitting the market. If this trend keeps up, we may be looking at rates in the mid to high 5% range this summer.

Current Outlook: Locking