What Mortgage Rates Will Do Over The Next 30 Days (March 26, 2009 Edition)

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I am a regular participant in the Bankrate.com Mortgage Rate Trend survey and this week's survey is now available.

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:

• 50% predict mortgage rates will increase
• 25% predict mortgage rates will decrease
• 25% predict mortgage rates will remain unchanged

I am predicting that rates will increase over the next 30 days. My prediction may not be appropriate for your individual situation and it may be wrong, too.

Here's what I told Bankrate.com:

"The summer mortgage rate run-up is underway."

At the risk of beating the point to a pulp, inflation causes mortgage rates to rise.  It's because mortgage interest is paid in US dollars and inflation erodes the value of those dollars.  Therefore, rates have to rise to entice markets to invest in them.

Meanwhile, if we look back at the past few years, right around this time of the season, inflation pressures start building for one reason or another. This year, it's the dual-impact of the hope of an improving economy and the Federal Reserve's plan to print 1,750,000,000,000 dollars. 

The former increases demand for energy and the latter makes the energy cost more. When gas prices make front page news, that's your signal that things are about to get bad.  Right now, it's just "news".

We can't be sure when inflation will finally take hold, but it will. And when it does, you'll be glad you locked in your mortgage rate at today's still-low levels.   The defensive move, therefore, is to lock your mortgage rate.

And if you're one of those sadistic types that makes a game out of timing the bottom of markets, you may have already lost.  There's too many factors working against low rates right now so if you're on intent on losing a second time, consider going on The Price Is Right to make the stupidest Showcase Showdown bid of all-time.  At least that loss won't stick with you for 30 years.

As a reminder, mortgage rates do move quickly so I use Twitter to transmit near-real-time changes.  Come watch my feed at http://www.twitter.com/mortgagereports. I post several updates each day.  And If you do join, let me know you're watching by sending me a tweet.