Rate Update November 5, 2008

Posted on by Evan in Rate Update

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

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