Rate Update November 5, 2008

We shifted out outlook from locking to a floating bias one week ago today.  This morning we’re finally seeing better rates as they have dropped sharply.

Bankers and economists are expecting a deep rate cut in Thursday on the part of the European Central Bank.  As I explained in yesterday’s rate update:

When foreign central banks cut interest rates it often creates greater demand for US denominated assets because the relative yield for US assets becomes more attractive.

Mortgage-backed bonds rallied yesterday and today and are currently trading above the 200-day moving average.  If mortgage-backed bond prices can manage to close above this level it would be a VERY positive technical trading signal for mortgage rates.

Current outlook: floating so long as bond prices remain above the 200-day moving average

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.