With evidence that Swine Flu ran for the border this past weekend, mortgage rates are improving.  Confirmed cases of H1N1 Swine Flu have spread to 5 continents and financial contagion has put markets in Safe Haven mode.

"Safe Haven buying" is a market jargon.  It describes a common trading pattern during that emerges during times of uncertainty. 

Safe Haven buying is characterized by large numbers of investors moving money away from risky investments and toward safer ones.  It's a logical response to surprise events. 

Rather than doubling down on bets in play, traders prefer to play it safe by taking their chips off the risk table until the future becomes more clear.  Hence the jargon-like term, "Safe Haven buying".

In some circle, Safe Haven buying is better known as a "Flight to Quality", a term indicative of the asset types that typically benefit in times of uncertainty.  Among analysts and economists, Safe Haven is often called plain, old "risk aversion".

Whatever you call it, though, mortgage rate shoppers are squealing with delight right now. In a week in which mortgage rates were supposed to face upward pressure from new economic data and a Federal Reserve meeting, fears of a pandemic virus are hogging the headlines and leading mortgage rates lower. 

Traders are nervous that Swine Flu will slow the recovering economy's growth and that is drawing money into mortgage-backed bonds.  Conforming mortgage rates have improved by 0.125 percent since Friday's market close as a result.

If nothing else, the Swine Flu outbreak vis-a-vis the mortgage market's reaction illustrates a key theme present in this website's writings. It's not the events we prepare for that drive mortgage rates the most -- it's the events we never predicted at all. 

Today, the element of surprise is working in favor of conforming mortgage shoppers in Cincinnati, Chicago, or wherever.  Tomorrow, momentum could be reversed. All it would take is a downgrade to the World Health Organization's alert level. Less fear of contagion, less need for Safe Haven buying.

When risk-taking returns -- and it will return -- higher mortgage rates should return with it.

Dan Green is an active loan officer. Email or call 513-443-2020. Dan is on Twitter at @mortgagereports.