Rate Update November 21, 2008

Mortgage rates are unchanged this morning.

In Tuesday’s ‘rate update’ we mentioned the unorthodox technical trading patterns that the mortgage-backed bond (MBS) market was experiencing.  Today marks 13th day that MBS prices have traded at or near the 200-day moving average price line.  This is unprecedented.  A look at the bond chart below shows bond prices over the previous 90 days.

The first box shows MBS prices moving sharply away from the 200-day moving average (October 2008).  The second box shows MBS prices hovering around the 200-day moving average.

Unfortunately it looks as if MBS prices are poised to move lower which would push rates lower in the near term.  However, in the long-run we believe that deflationary pressures could push mortgage rates lower.

Current outlook: Locking in near-term/ floating in long-term

The views and opinions expressed in this site are those of the author(s) and do not necessarily reflect the official policy or position of Cherry Creek Mortgage Co., Inc. This is for informational purposes only. This is not a commitment to lend.