Today's Market Update Tuesday May 26, 2009 4:16 PM ET

Current Trend Direction: Sideways

Risks Favor: Locking

Current Price of FNMA 4.00% Bond - 99.09 -32bp

30 Year Fixed Rate
4.375% APR 4.57%

30 Year jumbo Fixed Rate
5.125% APR 5.23%

5/1 Jumbo Arm
4.50% APR 4.61%

7/1 Jumbo Arm
4.75% APR 4.70%


Mortgage Bonds are down 41 bp on the day.
The sell off was contributed to better than expected consumer sentiment and a strong day of gains for stocks.
This may prove to be a bad week for Mortgage Bonds. As discussed last week there is a massive supply of Treasuries hitting the markets this week and poor auction results will only worsen an already concerning situation.

We are recommending locking rates here ahead of further short term market deterioration.
So far, Adjustable Rate Mortgages , such as the 3, 5 and 7/1 Arm's have not re priced for the worse. However, if the market continues down this path then re pricing for these mortgages is inevitable.