A Mortgage Rate Prediction For The Next 7 Days (July 22, 2010)

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Looking to lock a mortgage rate this week? Wondering if you should float your rate instead?  I'm a contributor to the Bankrate.com Mortgage Rate Trend Index and this week's survey should give you guidance.

Conforming Mortgage Rate Forecast Only

By way of disclosure, these mortgage rate predictions are for Fannie Mae and Freddie Mae mortgages only. The survey is national, covering Cincinnati, Ohio; Potomac, Maryland; and, everywhere else.  FHA streamline refinances are not covered because FHA mortgage rates are based on GNMA securities. Furthermore, unique property types including non-warrantable condos in Florida, condotels in Chicago, and loans for investors with more than 4 properties financed are excluded.

for a real-time rate quote.

Breaking Down The Predictions

Here's the mortgage rate predictions for the next week:

• 22% predict mortgage rates will increase
• 11% predict mortgage rates will decrease
• 67% predict mortgage rates will remain unchanged

I expect mortgage rates to increase.

My advice not be appropriate for your individual situation and I'm not always right. Ultimately, you may find your time better spent watching a construction paper re-enactment of every original Mortal Kombat death move.

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

"It's been three weeks with no change whatsoever. Rates have troughed. Increases are ahead."

Mortgage markets can't seem to break through resistance. It's signal that higher rates are coming.

For Mortgage Rates Clues, Watch Patterns

Mortgage rates are based on the price of mortgage-backed bonds and, like stocks, bonds respond to changes in economic data including inflation readings, jobs surveys, and housing reports. It's called "fundamental trading"; changing your risk positions based on measurable, quantifiable data.

However, there's another, equally-important type of market-making called "technical trading".

Technical trading is pattern-based trading, using historical trends and algorithms to predict where an asset's price will go next. Trading is carried out by software looking for peaks, valleys, and humps in an asset's pricing history with the assumption they'll repeat themselves.

Today, despite fundamental reasons for mortgage rates to fall, technical reasons are keeping them up.  Mortgage rates have tried to cut lower for 3 weeks now but can't seem to break through. This is technical trading in the wild.

When rates can't go lower, they must go up instead.

Rates Will Fall Again, But Not For A Few Weeks

30-year fixed mortgage rates are in the 4s.  5-year ARMs are in the 3s.  Rates like this warrant a phone call to your lender to at least ask about a refinance.

Call your loan officer and get the math. There's an excellent chance that refinancing your home will lower your mortgage rate and lower your bills substantially.  And, if you're worried about increasing your loan balance, just ask for a "zero cost" mortgage -- the rates on those are really low, too.

Just don't twiddle your thumbs.

Mortgage rates wait for no one and spikes can happen quickly.  The good news, though, is that technical trading factors will eventually bring mortgage rates back lower -- that just may not happen in the time frame in which you need it.

There's no time like the present, in other words.

Lock Your Mortgage Rate With A Quick Phone Call

Call my office today to give an application by phone. It's a 4-minute call and I can have a guaranteed interest rate in your hand within an hour. My number is 513-443-2020 or, if email is more your thing,and we can get started that way instead.

Either way, it's time to make a move..