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MBS Highway Daily Updates 03/06/2023

Current position: Carefully Floating



Make sure to take the MBS Highway Housing Survey to get a real time read on the housing market, and feel free to share with referral partners for their input HERE.

Mortgage Bonds are continuing to rebound higher after a nice rally to end last week.

Housing Opportunity Calling in the Air

Over the last month, mortgage rates have risen roughly 1%. And while that creates a headwind, it also creates an opportunity for your buyers.


After seeing home prices rise significantly over the last few years, we have seen some softness over the past several months. When is the best time to be a buyer—when the bottom has already come in and prices are rebounding to the upside or when the bottom has yet to be hit? It's nearly impossible to be good enough to time the absolute bottom, but when things are already recovering, sellers are more confident, and there is more competition. When things are still on the way down, sellers are more fearful, and there is less competition.


The best time to buy is right now, when things are still moving lower and the bottom is likely nearby. If we look at the last market bottom cycle, which occurred in February of 2012, we can see that prices recovered quickly. They rose by 8% over the next year, with inventory levels around 2.4M. Today, we are seeing inventory levels of 980k, while active listening is only 578k. This leads us to believe there may be an even greater opportunity for appreciation going forward, but let's look at a conservative example:

Home value: $500k

Mortgage Amount $400k

Rates have risen 1%

Monthly Payment increase 30 - year $257

Increase over year $3,084

Opportunity is 2% discount $10,000 savings

Prices rise as rates decline , 3 % est $15,000 appreciation

Cost for higher rate plus refi -$5,000 higher rate / refi

Total benefit $20,000

Use the current higher rate environment to get a deal for your customer ahead of the rebound in prices when rates come down and activity comes back.

This Week

Tuesday: Fed Chair Powell's Speech

Wednesday: ADP Employment Report; Mortgage Apps; JOLTS; Powell Speech; 10-year Auction

Thursday: Initial Jobless Claims, 30-Year Auction

Friday: BLS Jobs Report

Technical Analysis

Mortgage bonds have started to rebound higher after a month-long downtrend. They formed a "morning star" pattern and are beginning to show signs of a positive stochastic crossover, which would portend a follow-through to the upside.


This is the opposite pattern from what we saw ahead of last month's jobs report. The technicals will take a back seat to the jobs data, but this could be a sign that traders are positioning themselves ahead of what they believe to be weaker jobs data.


Mortgage bonds are up against a formidable ceiling at the 99.845 Fibonacci level, but weaker ADP data on Wednesday and weaker BLS jobs data on Friday could propel things to the 100-day moving average. We don't know what the job figures will come out at, but they will not have the adjustments we saw in January, which skewed things, and we hope they will come in below the estimates, which are somewhat high at 200,000. Begin the week carefully floating.


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