A Mortgage Rate Prediction For The Next 7 Days (December 16, 2010)

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Thinking about a refinance? Wondering if rates will rise or fall in the next few days? I'm a contributor to the Bankrate.com Mortgage Rate Trend Index and this week's survey should give you guidance.

Conforming Mortgage Rate Predictions Only

First, the fine print. These mortgage rate predictions are for conforming mortgages in Cincinnati, Ohio; Loudoun County, Virginia; and wherever else conforming mortgages are available.

Jumbo mortgages are not part of this survey because jumbos price differently like conforming loans. The same for FHA streamlines and VA home loans. Furthermore, unique property types including non-warrantable condos 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 outlook for the upcoming week:

• 73% think mortgage rates will increase
• 20% think mortgage rates will decrease
• 7% think mortgage rates will won't change

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 watching the greatest mash-up breakdown of all time.

Either way, as I told Bankrate.com : "The Fed is telegraphing inflation. Prepare for it."

The Mortgage Market Unravels

7 weeks ago, the Federal Reserve made a new, $600 billion commitment to the bond markets. The plan is often referred to as QE2 -- market short-hand for "Quantitative Easing: Part II".

Prior to QE2, mortgage rates were cutting new lows weekly. Pricing reached its best levels of all-time and, given the momentum that had built up, the 30-year fixed looked headed for the 3s.

Since QE2, however, that momentum has reversed. The mortgage bond market rally has slowed, stopped, and clicked into reverse gear. Instead of improving each day as market observers had come to expect, daily mortgage pricing has been getting worse.

At first, rate changes were gradual. Then they picked up steam. Now they're a metaphorical locomotive. In the 7 weeks since QE2, mortgage rates have retraced the gains of 7 months.

The Refi Boom is over. A new market is beginning.

Rates This Low Won't Last. And I Mean It.

When mortgage rates move, they move quickly. Especially when markets are wound as tightly as they are right now.  We've seen a complete unwinding since last month, and it's accelerating.

Even this week, Tuesday and Wednesday accounted for the worst 2-day MBS loss in recent history. And calling it a loss isn't even fair.  It was more of a beating. The carnage will continue into 2011, too.

It's why you should lock your rate now.

Stop waiting for rates to "come back". Stop thinking the markets "are due". Stop thinking you have a day "to think it over".  They won't, they're not, and you don't. What we're living through right now is the natural correction that follows a historic, 7-month rally.

It's Time To Lock Your Mortgage Rate

If you're shopping for a loan, tell me how I can help you.

1. with the basics of what you're trying to do. No novels -- just some bullet points.
2. Wait for my reply -- I'll have some follow-up questions for you.
3. If the pricing is favorable for you, we'll lock immediately, before rates rise again

That's it!

Expect me to reply to your initial email within about an hour, during business hours.