Bankrate.com Mortgage Trend Index (December 4, 2008)

• Tweet

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 only.  It does not apply to FHA mortgages, VA mortgages, or jumbo mortgages.  However, I do lend on all of these loan types in all 50 states -- email me for a rate quote.

Anyway, here are the group's predictions for the next 30 days:

I am predicting that rates will remain unchanged over the next 30 days, but don't necessarily follow my advice when choosing whether to lock a rate, or float it.  My advice may not be appropriate for your individual situation.

From the Bankrate.com survey:

"Day-to-day swings could be large, but rates will move within a tight range."

Sometime last week, mortgage markets got a boost from the Federal Reserve when Ben Bernanke & Co. pledged $500 billion to buy mortgage bonds before the end of the year.  That's a large buy for a 30-day window and the move was a complete shock to the market. In shifting the demand-side of the Supply and Demand curve, the Fed caused mortgage prices to rise and, therefore, mortgage rates fell.

In the World of Bonds, a security's yield moves in the opposite direction from its price.

Since the intervention, however, mortgage markets have regained their balance.  Rate appear to have found an equilibrium point about three-eighths of a percentage point higher than last week's low point.  Some days, we're above that point and some days we're below it, but for the most part, markets keep returning to the middle.

For tuned-in mortgage rate shoppers, this type of pattern may help signal when it's time to lock a rate, and when it's time to float it.

• When rates are below the Straddle Line, lock it.
• When rate are above the Straddle Line, don't lock it.

Or, you could just play it conservative and lock at the first chance you get.  Supposing rates fall in the future, you could always refinance again.

In the meanwhile, stay up-to-date on what mortgage rates are doing using my Twitter feed. Get near-real time market updates and intra-day commentary at http://www.twitter.com/mortgagereports.