The Mortgage Man

Get more out of your mortgage experience!

Thursday June 26, 2008

Mortgage Bonds have likely hit the ceiling today.

The FED came out with the results of their meeting yesterday, and as expected they did not move rates from their existing level of 2%.  This comes on the heels of 7 straight rate reductions in as many meetings.  There is increasing opinion that the next meeting will likely bring a rate hike with it to help strengthen the dollar and thwart off the rise in oil prices.

Mortgage bonds are trading slightly higher today, but they are up against a top side resistance level.  With the state of the stock market, and an upward correction looming, it is unlikely that mortgage bonds will break through that level of resistance.  In addition, since we already know that typically what is good for stocks is bad for bonds, if there is a rally in stocks in the coming days, you can place your bets on the fact that bonds will go through a sell off.  This means that mortgage rates will rise and it would be a good idea to lock in soon (or at least be prepared to lock in) to protect yourself from upward movement.

Existing Home Sales for May cam in at 4.9 million, in line with estimates.  This is a good sign for real estate because it shows some stability even though the market in general is slower than in recent past.  It is also an affirmation that regardless of the doom and gloom you may hear in the media, people are still buying houses.

Here in Pensacola Florida, even though we are statistically the poorest county in the state, we had the highest increase in average sales for the first quarter of 2008 out of 19 metropolitan areas surveyed.  We are also holding steady at 350 to 400 sales per month.  Not where we would like it to be, but not too shabby either.

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