What Mortgage Rates Will Do Over The Next 30 Days (March 12, 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:

• 23% predict mortgage rates will increase
• 8% predict mortgage rates will decrease
• 69% 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:

"Stock market rallies will force mortgage rates up."

For today's mortgage rate shopper, there's a lot going on with the economy, It's too much to pay attention to, really.  And, on the surface, while most of the news has been decidedly negative, we're witnessing a gentle shift in trader psyche on Wall Street.

Over the last half-year or so, traders had greeted every piece of bad economic news with a bronx cheer.  Heck, they even did it for the good news, showing their cynical side. No matter what the data said, traders sold.  As a result, stock markets tanked and money flowed from the risky world of the Dow Jones towards safer, government-backed investments like mortgage-backed bonds.

This is a major reason why mortgage rates fell into the 4-percent range in December. Traders had few places else to put their money.

But now, there's a perceptible shift underway. It's as if traders are tired of pessimism.  News that should be consider bad is getting blown off.  For example, rock-solid GE's credit status was just downgraded; jobless claims are at another all-time high; household net worth is plummeting.  Yet, markets aren't budging.

Instead, there's hope. Citi says it's making a profit.  Congress meets on mark-to-market rules.  Heck, even consumers are out spending money.  Maybe it's Daylight Savings and the warmer weather this week, but the guys punching clocks on Wall Street see brighter days ahead.

If you're a home buyer or homeowner looking to refinance, this is dangerous to your pending mortgage rate. As Wall Street gets optimistic, it'll unwind those "safe" positions its holding in mortgage-backed bonds and will move that cash back into stocks.

For now, the dollar flow to stocks has been slow.  Mortgage rates have only edged highed.  Sooner or later, though, it's going to PoP! and when it does, mortgage rates are expected to rise.  And quickly, too.  While you're taking a break from rate shopping, laughing yourself silly at one of the best pranks in history, you may come back to your desk to find that the window for low rates has closed; that the markets have turned for good.

Or, not, I suppose.

So here's the recommendation.  If you're wondering whether or not "now" is a good to refinance to refinance, consider that rates really can't fall that much further and have already lifted off their December 2008 lows by a half-percent.  There's more potential to rise than to fall going forward.  Get locked, I'd say. At least you can stop worrying about it.

That said, I use Twitter to transmit real-time changes in the mortgage market and prices.  You're welcome to watch my feed at http://www.twitter.com/mortgagereports. I post several updates each day.