October 17 ... MBS Open flat..

Today our 6.0 mortgage backed securities opened flat but have since risen. We could very well be on track for much improved rates over the next few weeks to months.

Today brought us the release of 2 economic reports. First the housing starts came in worse then expected at 817,000 dropping from 895,000 for the prior month. We also had the release of consumer sentiment which gives us an insight on how the consumer feels about our economy. As you can probably guess, it came in much worse then expected at 57.5 when economists where expecting 66.0. These reports continue to show weakness in our economy and are pointing to a recession. Weakness in our economy is a positive for mortgage rates. This is due to less consumer spending which causes prices to fall which lowers inflation. Inflation is the main driving force behind mortgage rates.

Volatility will continue, just watch the Dow. One moment up a couple hundred the next moment down a couple hundred. One good sign is that mbs are trading in a very smooth pattern, not much volatility. We believe this is a positive as investors have hope in the TARP rescue package.

It appear that it is safe to float today but as always things could swing the opposite direction very quickly. Stayed tuned to the blog and we will alert you if you should get your loans locked.