Mortgage Rate Forecast–May 11, 2011

Locking Stance:  LOCKING      Mortgage Bonds:  -6bp

We had the monthly mortgage bond rollover (-25bp), which is skewing the charts and may actually be a good thing for mortgage rates remaining low.  That means we are actually up on the day today, but that also means the corrective move is not solid.

There were no major players regarding economic reports today.  The MBA Purchase Applications report showed Purchase Applications were up 6.7% and Refinance Applications were up 9.0%.  The US Trade Deficit widened on higher oil prices, coming in at $-48.2B, though there were also positives within the report.  Today’s 10-year T-Note Auction followed the lead of yesterday’s 3-year T-Note Auction, coming in with pretty decent results despite its higher amount.  That is essentially what is fueling the rise in MBS prices at the moment, but we still have that 200-day moving average to contend with.  A few Feds are speaking also today, though it does not appear they are stirring things up.

What does this mean fro Mortgage Rates?  Mortgage rates are holding fairly steady still, though the short-term outlook remains favoring a locking stance.  The longer-term outlook remains questionable at this point, so locking is still most likely the better choice.

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