Market Update February 19

Florida Mortgage – We have been overwhelmed as of late with different ideas and programs that President Obama is initiating, most recently announcing his plan to help homeowners avoid foreclosure via two different initiatives. One is a refinancing program for homeowners with less than 20% equity in their homes, or who owe more than their home is worth. The second program attempts to lower monthly payments for homeowners at risk of losing their home. As we break apart the details of this plan, we will be giving you more information.

This morning, Bonds are trading lower as the tough multi-layered ceiling of resistance has put a lid on any advance. A quick look at the Bond Page shows the 50-day Moving Average has been a tough level to break for the entire month of February. Oftentimes, prices will drift lower after getting tired out from failed attempts to break above resistance. This appears to be happening now, and has given us a Locking bias for the past few days.

This morning’s Producer Price Index (PPI) grabbed some headlines as being a hot number, but we feel that it is more of an aberration due to one time charges, as well as data that suggests inflation on the wholesale level will remain tame down the road. It’s funny to watch the markets looking for some inflation as “good news”, since everyone realizes deflation is a much worse problem.

Initial Jobless Claims rose by 627,000, near expectations of 620,000. A staggering number, but what’s of even greater concern is that Continuing Claims now stand at 5,000,000. Think about it. 5 Million Americans are now unemployed and cannot find work. For many of you reading, this situation may hit close to home. Will it get better? The answer is yes, but not right away, and it will almost certainly worsen before the turn. Look for the worst to come over the next three months, but then some moderate improvement should begin to follow as we head towards the Summer.

We suggest locking rates at 1% origination fee structure as the heavy layer of overhead resistance has kept a lid on any meaningful price advances. We are offering rates in the 4% range and feel confident now is the time to structure financing.