Yesterday we had a huge rally in mortgage backed securities, improving almost 1 full point in discount or about a .25 lower in rates. It seems investors finally saw some value in mbs after they fell to the lowest point of 2008.
It appears the rally has legs today as well. This morning the economic reports showed continued problems with the economy and lower inflation, both of those are a positive for mortgage rates.
Here are the reports:
- Consumer Price Index, came in at .0% with economists expecting prices to rise .1%
- Core Consumer Price Index, came in at .1% increase with economists expecting a .2% increase
These reports continue to show inflation is moderating, and as stated often, the mortal enemy to a mortgage rate is inflation.
- Jobless claims, came in at 461k with economists expecting a 475k reading and a drop of 16k from the prior week. However, the continuing claims remain at a 5 year high.
- Industrial Production, came in at -2.8%, with economists expecting a -.8% drop. This report continues to show weakness in our economy.
- Philly Fed Index, came in much worse then expected at a -37.5 reading when economists where expecting a -5.0. A negative reading shows are economy contracting and a positve reading shows expansion. The prices paid component dropped significantly as well showing that inflation should continue to moderate. This reading is the lowest reading in the index's history.
All of these reports should be favorable to mortgage rates and it appears the rally from yesterday will continue. If you have a loan that is not locked, you can safely be in the pool for the day and continue to float. If the market turns, which is possible as continued volatility will remain in the market, we will post back to allow you to get your loans locked before lenders reprice for the worse.