The Mortgage Rate Prediction For The Next 7 Days (May 6, 2010)

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Looking for a mortgage rate prediction? I am a weekly participant in the Bankrate.com Mortgage Rate Trend Index and this week's survey may have the answers you need.

Fannie Mae And Freddie Mac Mortgage Rates Only

By way of disclosure, the Bankrate.com survey is for conventional, conforming mortgages only. It does not apply to FHA mortgages nor is the survey specific to Ohio or Illinois 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:

• 35% predict mortgage rates will increase
• 18% predict mortgage rates will decrease
• 47% predict mortgage rates will remain unchanged

I expect mortgage rates to remain unchanged.

My advice not be appropriate for your individual situation and I'm not always right. Ultimately, you may find your time better spent watching Tayne do a Hat Wobble and a Flarhgunnstow.

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

"Apparently, the Greek debt crisis ain't over till it's over. And rates stay steady till it is."

It's like White Men Can't Jump.  Every time you think the story's over, it's not. And it goes on and on and on.

Safe Haven Buying Continues Because Of Greece

Safe haven buying is a market trading pattern. It describes a risk-averting trading pattern that often emerges during periods of economic uncertainty. Investors move money away from riskier investments and into safer ones.

One way to do that is by selling high-risk assets and investing the proceeds in ultra-safe securities.

Right now, with the future of Euro sovereign debt in doubt, a lot of high-risk/high-reward assets and getting sold off.  And domestic mortgage bonds are reaping the rewards.

Why mortgage bonds?  Because MBS is backed by the U.S. government and our government's pledge to service debt is stronger than oak.  That makes them safe and causes demand to rise.

More bond demand means higher bond prices which leads to lower rates.

Bond rates move opposite bond prices.

Too Much Fear Will Cause Rates To Backfire

Fear and doubt work in favor of mortgage rates.  Too much fear and doubt, however, work against them. It's why mortgage rates won't fall further in this next week.

Mortgage bonds are quality assets, but on the debt totem pole, they sit second to treasury debt.

In other words, when things get really bad, U.S. treasuries tend to rally more than mortgage bonds. Both improve, but treasuries improve by more.  And that's what's starting to happen.  The spreads between treasuries and MBS are growing and it shows us that investor fear is growing.

Mortgage rates may have fallen as far as they're going to fall.

It's A Safe Time To Lock A Mortgage Rate

There's very little reason for mortgage rates to drop right now. Markets have already squeezed the gains out the Greece debt scenario. It's time to move into locking position.

MRV -- Mortgage Rate Velocity -- is as high as its been in a year and rate changes have come quickly. If you haven't given a loan application to your loan officer, think about doing it today. The longer you wait, the more this next loan may cost you.

Applications-by-phone are a 4-minute process. To give one, call my office at 513-443-2020 or. And be sure to give applications to other loan officers, too. Don't worry -- your credit score won't be damaged if you do it the right way.