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Are mortgage rates going up? Are mortgage rates going down? I am a regular participant in the Bankrate.com Mortgage Rate Trend survey and this week's survey may have your answers.

The Bankrate.com survey is for conforming mortgages. It does not apply to FHA mortgages, VA mortgages, jumbo mortgages, or foreign national mortgages. For rate quotes, .

The group's 30-day prediction for mortgage rates:

• 29% predict mortgage rates will increase
• 29% predict mortgage rates will decrease
• 42% predict mortgage rates will remain unchanged

I am predicting that rates will decrease over the next 30 days. My prediction may not be appropriate for your individual situation so don't go doing The Andy Dance just yet.

Here's what I told Bankrate.com:

"Look for a massive mortgage-backed bond purchase from the Fed. "

Last in 2008, the Federal Reserve pledged $500 billion to the mortgage markets; the money to be used for buying mortgage-backed bonds to help hold mortgage rates down.  Several months later, the Fed upped its commitment to $1.25 trillion.

Immediately following each pledge, mortgage rates dropped. This happened because the Federal Reserve's intervention create a new demand, making mortgage bonds more scarce.  It's the Law of Scarcity and it drives mortgage-backed bond prices higher which, by definition, means that bond yields will fall.

However, over time, market excitement turns to economic anxiety. 

Because the Fed finances its bond buys using freshly-minted U.S. dollars, the opposite of the Law of Scarcity is in effect.  With each new dollar printed and put into circulation, the value of all existing dollars fall.  Over time, this causes mortgage rates to rise because mortgage bond repayments are made in U.S. dollars and if those dollars are worth less, the demand for mortgage-backed bonds diminishes and yields rise. 

We saw this start to happen at the end of April through early this week.    Fears of monetary-supply inflation led conforming mortgage rates well into the 5 percent range.

Meanwhile, the government has implied to markets that sub-five percent rates are optimal so, if we reconcile that inference to the Federal Open Market Committee's last press release, it's possible that the Fed accelerates the timing of its bond buys to suppress the kind of rise in mortgage rates.

The Fed is buying at a measured pace of about $4.7 billion per day right now.  There's nothing to stop it from splurging to the tune of $20 billion or more at a time.  The net effect of a move like this would be lower rates in the near-term then higher rates towards the end of the year. 

Incidentally, most Fed officials think the economy will be on its way to a clear recovery by Q4 2009. Loading up on mortgage bonds now may get a better bang-for-the-buck than maintaining the same steady purchase pace through December.

If the Fed buys, rates will fall. 

I use Twitter to transmit near-real-time changes in the market.  You can watch my feed at http://twitter.com/mortgagereports. I post several updates each day.  You can also send me some information  so I can add you to a "watch list".  That way, when mortgage rates hit your target rate, we can be ready to jump on it.

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