Mortgage bonds have taken a beating the past few weeks. However, the past few days trading action show possible stability. This looks to me like an area of price support establishing itself.
Look at this chart.
Remember, as mortgage bond prices go down, mortgage rates go up.
That green bar on the very right hand side shows prices that prices opened and have moved higher (that's why the bar is colored green). This pattern of today's bar in conjunction with yesterday's one is called a Bullish Engulfing candlestick pattern. This pattern, seen at the end of a downward move, is typically a sign of the market turning.
So, what does that mean to you?
Well, if you are in need of locking in a mortgage rate on a current mortgage loan application in process you should watch for a move for improving rates in the coming days.
Now, don't expect much lower rates but 0.125, 0.25 to maybe 0.375 lower in rate might be available.
However, once we reach the low of the upcoming move expect rates to stop their improvement and then get back on the rising trend we are now in for years.
Brett
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