The Bond Market Rallies Leading The Way For Mortgages Rates To Plunge.

Strength in today's mortgage bond market could lead to a great opportunity for home owners looking to refinance.

As usual, what is good for the economy is good for stocks and bad for bonds and vice versa. And, what is good for bonds is also good for mortgage rates. This morning, the bond market was lumbering along without much going on…and then the University of Michigan’s Consumer Sentiment report came out with the worst reported numbers in 26 years. This triggered a buying frenzy in the bond market, and mortgage bonds are currently trading at 70 basis points higher than the open.

On the surface there was good news in the housing market with Housing Starts for April up to 1.038 million, up from March’s 932,000 and significantly higher than the projected 940,000. I say on the surface because even though housing starts and building permits are up, it is yet to be seen how oil prices hitting record highs on a daily basis will affect the costs to build later. (Oil hit a new high again this morning at $127.43 per barrel).

Goldman Sach’s (one of the world’s leading securities firms) said today that they expect oil to hit $141 per barrel by the end of the year, and as much as $149 in 2009. If this is true, you better dust off the solar panels and check the air in the bicycle tires because this may be a bumpy ride.

As far as mortgages go, the bond has soared past resistance levels at the 25, 50 and 100 day moving averages. With strength like that, we may see push in the refinance market soon. If you are even considering refinancing, get your ducks in a row as movement like this will correct itself quickly, and the window of opportunity will be short.