Rate Update June 26, 2009

Fixed Mortgage Rates are slightly lower from yesterday.

Mortgage Backed Bonds experienced a great boost yesterday as it plowed through the 200 day moving average.  This gain has resulted in lower interest rates coming out yesterday afternoon and this morning.  Currently, bonds have backed off a bit from yesterday’s rally and remain about in the middle of the 200 day moving average (which hopefully will now serve as a floor of support), and the 50 day moving average which seems to be a ceiling of resistance.  For now, it should be safe to see if bonds can get any closer to the 50 day moving average and possibly break though it as stocks are struggling in early morning trading.  For loans set to close in the short run however, it may be wise to lock in rates now after this recent boost to bond prices.

Yesterday the New York Fed announced it had purchased $20.29 Million in Mortgage Backed securities last week.  This brings the total to $570 Million since the beginning of the year, and about half of what the Fed has indicated that they will purchase.  Another report from yesterday showed that the savings rate in the U.S. has increased 6.9%, which is the highest level since 1993.  Obviously it is good to see American’s start to save money, which will hopefully lead to less dependency on personal credit in the future, but this also hurts the economy as it tries to dig its way out of the current recession.  The savings rate could be a good indicator on how the U.S. consumer is confident in the economy and job security moving forward.  Right now, it looks as though there isn’t much confidence there.

Current Outlook: Cautiously floating