Market Update
Friday February 11th, 2011 5:11 PM ET
By John Sauro
Mortgage Bonds Found a Bottom?
Bond prices have been losing ground since January 31st and mortgage rates have suffered.
The Fannie Mae 4.0% coupon managed to stage a rally 53 basis points on Friday after several failed attempts earlier in the week, closing at $97.00. Mortgage rates are now higher by about .75% since early November. Technical signals are suggesting the Bonds may have found a bottom this past Tuesday, when prices inched above resistance at $96.78 after trading under selling pressure earlier that day. The Bond will need to punch through the next level of resistance at $96.78 to add to any meaningful price appreciation.
If you need to lock into a mortgage rate, I recommend using a lender that will allow you to re lock the rate prior to closing. This will protect you from any interest rate increases and give you the opportunity to get a lower rate if rates improve.
Update on FINREG
The Congressional oversight plan noted they will schedule hearings regarding the Fed Rule on Regulation Z; Docket No. R-226, Truth in Lending. Lets hope they delay his rule along with the Dodd-Frank Legislation. If not it will further cripple the lending and housing markets.
Protect your homes value and your right to affordable home financing. You can easily notify your elected officials of you concerns by going to: www.RepealFinreg.com
My bias is toward floating rates here, as we anticipate possible higher prices for mortgage bonds..