Bankrate.com Mortgage Trend Index (September 18, 2008)

• Tweet

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

As a reminder:

1. The survey is for conforming loans only.
2. Send me email for personal purchase or refinance questions.
3. I twitter market updates a few times daily.  Get them on your mobile.

Anyway, on to the group's predictions for the next 30 days:

• 40% of participants predict rates will increase
• 47% of participants predict rates will decrease
• 13% of participants predict rates will remain unchanged

I am predicting that rates will increase over the next 30 days, but that doesn't mean you should 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:

"The market is cyclical and primed for a reverse."

Predicting the mortgage rate movement is harder than teaching a pug to say "I love you", but over time, there noticeable patterns emerge.  One of the most common patterns is the overbought pattern, a scenario in which market psychology overrides the facts of the situation, driving markets into imbalance.

We're likely in a time like that now.

In fact, Wall Street's financial system stress is so severe that, at one point yesterday, investors were paying more for government-backed debt than they would get back when the debt matured.  Some people thought that the "safest" play in a tumultuous market was to take a small -- but guaranteed -- loss.

That's absurd and mentality like that doesn't last forever.  It's against human nature.  And when it ends, it ends quickly and that's going to cause mortgage rates to spike.

To make sure you don't miss the end of the cycle, follow me on Twitter.  It's a free service, it's convenient, and you'll be more likely to get a good mortgage rate if you know what's happening in the markets in near-real time.