Mortgage Rate Predictions For The Next 30 Days (January 7, 2010)

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Need a mortgage rate prediction? I am a regular participant in the Bankrate.com Mortgage Rate Trend survey and this week's survey may point you in the right direction.

The Bankrate.com survey is for conventional, conforming mortgages only. It does not apply to FHA mortgages or jumbo mortgages. Nor is the survey specific to Cincinnati or Chicago.

for a real-time rate quote.

Here's the group's 30-day prediction for mortgage rates:

• 36% predict mortgage rates will increase
• 36% predict mortgage rates will decrease
• 28% predict mortgage rates will remain unchanged

I expect mortgage rates to decrease.

My advice not be appropriate for your individual situation and I'm not always right. Ultimately, you may find your time better spent on Greg Rutter's Definitive List of The 99 Things You Should Have Already Experienced On The Internet Unless You're a Loser or Old or Something than reading my analysis.

Either way, here's what I told Bankrate.com:

"Be patient. The market is in Correction Mode after December's awful results."

Now, if you were lucky enough to lock a 30-year fixed mortgage rate sometime between Thanksgiving and December 1, you got an awesome rate, really.  You're probably sub-5 percent and maybe didn't pay any closing costs to get there.

Pat yourself on the back if you got that rate because after the first of the month, December turned into a veritable mortgage market nightmare. Between December 1 and December 31, 2009, mortgage pricing deteriorated by more than 300 basis points.

100 basis points equals 1 percent so the math looks like this:

• December 1: You could lock a 4.750 percent, 30-year fixed with 0 points
• December 31: You could lock a 4.750 percent, 30-year fixed at a cost of 3 points

Owie.  Having to 3 points to get the same rate 30 days later is a lot of points.

And, the thing is, there really wasn't much reason for mortgage rates to get so bad, so quickly.  Sure, jobs data got stronger and the housing market showed more improvement, but there wasn't much else.

In fact, you could argue the opposite side and say that rates should have fallen.

During December, the U.S. dollar improved, retail sales were weak, and key inflation figures was tame.  Even the Federal Reserve gave the economy Even Steven report after its December 16 meeting.

Instead of responding to this type of data, mortgage markets suffered at the hands of momentum plays combining with low trading volume. The markets fell farther than they should have.  They're going to correct this month.

We've had 3 trading days so far this year. Rates -- along with volume -- have been improving.  It's a correction. Markets are returning to normal, whatever that means.  But, as they do, rates should settle in a little lower than what we've seeing right now.

If you can afford to be patient with a pending conforming mortgage rate locks, try it. You'll be rewarded.  The key, though, is knowing when to stop being patient.

For that, you may need some help.

If you don't have a loan officer you can call up for advice, know that you can always call me. Or,, whichever is easier.  I handle all of my own email and I would happy to help you lock your mortgage rate.

My bank has good, low rates and we're very responsive to our clients.