Rate Update October 23, 2008

Mortgage rates are unchanged this morning.

The rally for mortgage-backed bonds, which has brought rates down by approximately .50% over the past few days, may be running out of steam.  Although the news on the economic front remains grim (Greenspan warns higher unemployment inevitable, Goldman Sachs set to cut 10% of workforce, amazon.com cut it’s profit outlook citing a weak economy), which is typically benefits mortgage rates, we are cautious because of technical trading patterns.

Currently mortgage-backed bonds are trading above the 200-day moving average.  So long as prices hold this position we will remain in a floating position because rates are likely to move lower.  However, should bond prices dip below this level we’d expect rates to increase quickly.

Current outlook: cautiously floating