The Mortgage Rate Prediction For The Next 7 Days (April 8, 2010)

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Need a mortgage rate prediction? I am a regular participant in the Bankrate.com Mortgage Rate survey and this week's results may help you time a rate lock.

Conventional, Conforming Mortgage Rates

By way of disclosure, 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 Maryland or Virginia mortgage rates. Furthermore, unique property types including non-warrantable condos and condotels may be excluded.

for a real-time rate quote.

Breaking Down The Predictions

Here's the group's mortgage rates predictions:

• 38% predict mortgage rates will increase
• 31% predict mortgage rates will decrease
• 31% 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 watching Biz's Beat of The Day than reading my analysis.

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

"The last week was an overreaction. Rates ease lower in the near-term."

Last week saw 5 straight days of mortgage market losses. Rates shot higher.  Now, we get the correction.

Last Week, Why Did Rates Rise So Much?

A lot transpired last week that directly impacted mortgage rates.

First, the Federal Reserve stopped buying new mortgage-backed securities.  This was not a surprise by any means -- the Fed had been announced a March 31 end date for month, but after all the short coverings had come and gone, mortgage markets traded worse ahead of the expected supply-demand imbalance.

Lower bond prices yield higher mortgage rates.

Better-than-expected data on the economy helped push rates north, too.  Auto sales were way up, the Case-Shiller showed strength in housing, and the jobs report was nearly nearly as bad as it looked on the surface.

Furthermore, because of Spring Break, trading volume was thin and that magnified the jumps in pricing.

Overall, mortgage pricing shed 103 basis points, roughly equal to a 0.375% rise in rates.

Why Are Rates Coming Back Down?

Lucky for rate shoppers, mortgage markets over-reacted (like they always do).  This week is the bounce-back.

Trading volume is back to normal levels, Wall Street is grabbing some profits, and mortgage pricing is improving.  Plus, helping rates fall even further, debt concerns are re-emerging in Greece and it's driving the same type of safe haven buying that dropped 30-year fixed rates to near 5.000 percent in early-March.

Rates won't come all the way down to 5, but they will be lower seven days from now.

Your Mortgage Rate Strategy For The Week

Don't be in a hurry to lock a mortgage rate, but don't be careless, either. Markets are favorable but can change in an instant.  You don't want to be on the wrong side of that gamble.  It can mean the difference between saving 1/8 percent or losing it.

You're probably going to want your loan officer to help you with timing so be sure to ask.

Or, if your loan officer doesn't seem to be in touch with real-time market movements and the stories that shape your pricing,with your situation and I'll get you set up with the lowest rate I can.

It would be my pleasure -- I love to work with my readers.