What Mortgage Rates Will Do Over The Next 30 Days (February 5, 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:

• 26% predict mortgage rates will increase
• 26% predict mortgage rates will decrease
• 48% predict mortgage rates will remain unchanged

I am predicting that rates will remain unchanged 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 Fed's 'tools' prevent rates from rising like they want to."

The Fed re-iterated that it will "employ all available tools" to support financial markets.  What that really means is that the Fed plans to intervene as often as necessary to keep markets (and mortgage rates) at "optimal" levels, whatever that means.  There's no stated target -- just a feeling that making cheap credit available is a good thing.

Markets, on the other hand, lean towards the Risk-Reward Model -- they don't buy assets unless they think the return on investment is inline with its commensurate risk. Given the uncertainty about the economy, it's no surprise that market forces are pushing stock prices down and mortgage rates up.

That is, until the Fed steps in. 

The Fed trying to balance the markets is kind of like Indiana Jones trying to take the Golden Idol.  Indy knows the dangers of grabbing the idol going in but deftly skirts the booby traps and navigates his way to the podium.  After careful measurement, he takes the idol for his own and then he smirks, you'll remember -- he thinks he's home free. Then, Indy realizes the miscalculation.

The next 60 seconds are a frantic escape from cave's wrath of poison arrows, bottomless pits and rolling stones. And just when Indy thinks he's in the clear, the Havidos are waiting for him, arrows drawn.  Indy turns the idol over Bellock [cue the evil laughter] and runs for his life.

You can almost hear Bernanke yelling in the not-too-distant future.  "Start the plane, Chuck!  START THE PLANE!".

For now, the Fed's having an impact.  Mortgage rates remain near lowest levels of the last 7 weeks. However, if you haven't talked to your loan officer about a refinance or if you're shopping for a home loan, consider that your internal mortgage-rate clock may be ticking.

In the meanwhile, don't forget to watch my Twitter feed for running commentary on mortgage rates, markets, and the like. Follow me at http://www.twitter.com/mortgagereports and join the conversation anytime.