Rate Update May 28, 2008

Mortgage rates are modestly higher today than they were yesterday. For clients who did not get their rates locked yesterday we are recommending a floating position in the near-term because of technical trading patterns. If you look at the chart below you can see that bond prices have traded lower since last Wednesday when mortgage rates were about .25% better.

Bond prices have touched the 200-day moving average this morning (the blue line) and we expect this technical level to hold. If it does, bond prices should improve over the next couple days along with interest rates. The risk is that if this technical level does not hold we could see rates get much worse quickly.

Current Outlook: floating bias