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Monday October 6, 2008

Mortgage rates are down and so is the stock market.

Stocks are down today amidst continued concerns for global economic slow downs.  As of 9:24 A.M. (Central Time), the Dow has dipped below 10,000 for the first time since October 2004.  According to traders, this is due, in large part, to the increased uncertainty of the global economy and corporate earnings as we begin the 3rd quarter corporate earnings season.

As usual, when there is a selloff in stocks, people tend to move their money over to bonds, and today is no exception.  Mortgage bonds are up over 70 basis points leading to stronger monrtgage rates this morning.  If you were waiting to lock your loan, today would be a good day for it considering the major move of the index over levels of resistance.

You can see where today’s rates are currently at SteveRussellOnline.com.

Mortgage Rates Going Up With Stocks

Yesterday’s stock recovery could prove troublesome for mortgage bonds.

Stock traders had reason to smile yesterday as the Dow Jones made a huge bounceback.  Most analysts believe that it is not a long term recovery, but rather a temporary testing of the floor.  That being said, what is good for stocks is bad for bonds, and the stock recovery had an equal and opposite effect on bonds.

This morning, mortgage bonds are down sharply as the Dow Jones continues its bullish run upwards.  Because of this, it is highly suggested that you lock any outstanding mortgage rates if you have an active loan in process.

Housing starts came in for June at over 100,000 more than expected.  This is not necessarily a long term recovery, but more likely associated with recent building code changes in New York City that created a recent building boom for multifamily dwellings.

The real news is that after tremendous pressure in the financial sector on the stock market, JP Morgan Chase (the nations 3rd largest bank) reported their earnings higher than expected, even after a more than $1 billion write down for bad debt.  This is significant when most headlines are focused on the downfall of IndyMac rather than any underlying good news for the market.