Mortgage backed securities managed to end their recent run of price declines, posting nice gains yesterday. After the MBS rally most lenders did reprice for the better. To remind readers, as MBS move higher in price mortgage rates move lower. When looking to market fundamentals behind this rates rally some say a flight to quality ensued after bearish comments from  Fed governor Dennis Lockhart. Other point towards speculative bargain buying ahead of Chairman Bernanke's semi-annual report to Congress on monetary policy.

The economic calendar today is empty so market participants have been focused on Ben Bernanke's testimony on Capitol Hill.  Today he is delivering his semi-annual monetary policy testimony to the House Financial Services Committee. Most of what Chairman Bernanke said was "as expected", notably stocks moved lower as Bernanke highlighted the fact that the US was likely to endure a long recovery process as economic growth is expected to be slow. After some early morning weakness, Treasuries rallied on this news as investors moved into safer assets, we refer to this as a flight to safety rally. MBS prices have benefitted from this feeling of risk aversion and mortgage rates have ticked a few basis points lower today.

In other news from Capitol Hill, yesterday the House Appropriations Committee approved the Housing and Urban development budget for 2010. The approved appropriations include an extension of the loan limits  as defined by the 2009 American Recovery and Reinvestment Act. This means through 2010, borrowers in high cost areas will be able to utilize GSE/HUD funding for loans up to $729,750. This is the max loan amount a borrower could obtain using GSE/HUD loan programs, however it should be stated that you must live in a high cost lending area to obtain max loan amounts. Each county varies. HERE IS A LINK TO DETERMINE YOUR AREA'S MAX LOAN AMOUNT

Anthony Hood

888-935-2525 Ext 4021

www.equityinvestmentcapital.com