26 Feb Floating Bias
December’s New Home Sales were released this morning at 468,000 units. This surprisingly higher number beat expectations by 68,000! This was the best number in 5 ½ years and shows a 9.6% increase from December to January. However, purchasemortgage applications were reported to be down 15% so far this year…. This is a very lousy figure, and certainly can’t be tied to increasing mortgage rates, as rates have held fairly stable for the past few weeks. Contrasting information has become somewhat of a norm lately, as one good report seems to be offset by another not so good report as was the case today.
Mortgage bonds are slightly positive so far this morning, which is a good sign and increases hope that mortgage bonds may not fall on the downward trend that appeared inevitable based on the charts. We will be watching the markets closely, as the stock market may try for another record setting day today. In the meantime, there is still little benefit to float an interest rate, as we are still at the top of a trading channel. Therefore, the prudent suggestion is to lock. Should we break through the resistance overhead, we will switch to a floating bias.