Mortgage Rates Sheltered From Related Markets. Holding Near Summer Lows

Despite a rally in equity markets, prices of mortgage-backed securities moved higher yesterday. No economic data was released, trading volume was very thin, however MBS closed at their highest level since early this summer which allowed some lenders to reissue rate sheets with lower consumer borrowing costs. For the last half of the summer and all of September, prices of MBS have been stuck in a range, yesterday was the first time they closed outside of that range (highest prices since May). We must remind that this occurred in a low volume environment. Also, with the third quarter coming to an end, it is expected that market participants will be adding AAA rated assets to their balance sheets, so we are not too excited about the extent to which this rally continues….YET. We will grow more optimistic if the recent breakout holds when the fourth quarter begins on October 1.
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