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Bart Castelli

Mortgage Rates and MBS

Thursday, April 3, 2014 - Article by: Bart Castelli - Homestar Financial Corporation NMLS #70864 - Message

Yesterday's poor Mortgage Backed Securities (MBS) performance was a continuation of a longer trend over the last few days, and mortgage pricing has been creeping up. The MBS market opened this morning with little change, so mortgage pricing should remain about the same. Today's economic news releases are not anticipated to have much effect on trading so no extra volatility is anticipated. This said, there are always unforeseen events that may arise which are not expected. The 10yr is at very critical longer term technical level at 2.80%, the note hasn't traded above it since late January and it has been tested a couple of times and it held, then taking rates down. The pattern of the 10yr trading has built a huge triple bottom in yield at 2.60% with 70% of trading in the last 9 weeks between 2.70% and 2.80%. A break above 2.80% would be a bearish near term outlook and set a longer range goal of 3.00% with the first resistance at 2.90%. MBSs don't have the volume compared to treasuries so the technical outlook is best based on how the 10yr trades, as it is the driver for MBSs.

Lenders base their rates largely on the price movement of Mortgage-Backed Securities (MBS) which are traded in real time, all day, on the bond market. This means mortgage rates and/or fees often times move throughout the day, being affected by a variety of economic or political events. It's important to know that when MBS pricing goes up, mortgage rates or pricing generally goes down. When they fall, mortgage pricing goes up. Tracking these securities real-time is critical. For more information about the rate market, contact me directly. I am among very few mortgage professionals who have access to live trading screens during market hours.

Keep a strong look at the markets and continue to cautiously float if you do want to take a risk. Remember, if you want to know the benefits of locking your rate today versus floating, simply give me a call at 314-744-7806 or visit me on my website at I have access to real time Wall St. data and instant market alerts with breaking news that I monitor throughout the day to assist us on making the informed decision.

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