Mortgage Rate Prediction For The Next 7 Days (January 13, 2011)

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Tracking mortgage rates? Want a prediction? I contribute to the Bankrate.com Mortgage Rate Trend Index. This week's survey should help you.

Conforming Mortgage Rate Predictions Only

First, the fine print. These mortgage rate predictions are for conforming mortgages in Loudoun County, Virginia; Lower Merion Township, Pennsylvania; and wherever else conforming and super-conforming mortgages are available.

Jumbo mortgages are not part of this survey because jumbos loans differently from conforming ones. The same is true for FHA streamlines. 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:

• 44% think mortgage rates will increase
• 0% think mortgage rates will decrease
• 56% 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 spent listening to a song about Street Cred.

Either way, as I told Bankrate.com : "The Mini-Rally is over. Rates resume rising."

Portugal Finds It Funding

Over the last two weeks, there's been concern that Portugal might default on its national debt. It's an issue that's been percolating for some time. Then, near the end of 2010, the nation's debt rating was cut and its outlook named "negative".

Markets had expected the downgrade, but it sparked a run of Safe Haven buying nonetheless.

Investors moved their money from Portugal and other Eurozone nations into the relative safety of the U.S. bond market, among other places; just until they could evaluate the true risk of holding Portugese sovereign debt. The markets had a similar feel as when Greece first acknowledged its own sovereign debt problems 9 months prior.

Today, those concerns have been put to rest.

First, Portugal easily auctioned €1.25 billion in debt. The nation's debt was purchased at a lower yield as compared to November, and with much higher demand. That's good news for Portugal as a nation. Then, both Spain and Italy held successful auctions.

Eurozone debt concerns are easing. As a result, safe haven buying is, too.

It's why mortgage rates are higher.

"Buy On The Dip" Because Rates Are Climbing

There's two ways to play the market. You can (1) lock your mortgage rate now, or (2) wait to see if rates will start falling again. The better course is the former. Last week, the markets played a game of "just a dip". Rates will not fall long-term. What we saw was not a trend.

Remember, we had our trend. It came in 2010, lasted 8 months, and dragged rates to 4 percent. That trend is over now. It's back to reality.

Fixed mortgage rates should settle in the mid-5 percent range, and ARMs in the high-4s. Longer-term, they'll move back toward historical norms in the 6s and 7s. Especially as the U.S. economy kicks into higher gear.

The hardest part for rate shoppers is how quickly rates are changing. As compared to the 12-month average, mortgage rates are "expiring" 250% faster than shoppers are used to.  Lenders are updating their mortgage rates up to 5 times daily.

Rates are rising and we're the type of correction that follows an 8-month rally.  Drops in rates like we've just seen are your signal to lock -- not to double-down.

Get A Live Mortgage Quote Today

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

1. with the basics of what you're trying to do. Bullet points will be just fine.
2. Wait for my reply -- I'll likely have some follow-up questions for you.
3. If the pricing I come back with looks favorable, we'll lock it before rates reverse higher.

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

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