Mortgage Rates Reach A Milestone; Rise For The 7th Straight Day

• Tweet

Mortgage rates are getting slaughtered this month; rising every day since January ended. It's an historic losing streak for conventional mortgage rates. Mortgage applicants are paying a price.

Mortgage Rates Rise 7 Straight Days

Conforming mortgage rates are based on the price of mortgage-backed bonds. When bond prices rise, mortgage rates fall; and when bond prices fall, mortgage rates rise.

It's a fairly simple formula.

Unfortunately, mortgage-backed bonds are on a 7-day losing streak. It's a tie for the longest losing streak in the last 6 years, and it's raised mortgage rates to their highest levels in 9 months.

Just 11 weeks ago, rates were at a 50-year low.

And it's not just any losing streak, either. It's one marked by severe losses. Mortgage bonds have shed an average of 30 basis points per day, losing 210 basis points in total along the way.

In real-life terms, that means that a 4.750 percent rate quoted with 0 discount points at the start of the streak would require 2.1 discount points to close today.

2.1 discount points adds $6,300 in closing costs to a $300,000 mortgage. That's significant.

More Mortgage Bond Statistics (From 2006-2011)

The mortgage bond data does more than just show winning and losing streaks for rate. It also identifies patterns that have emerged over time.

Here's additional, noteworthy mortgage-backed bond statistics from the period 2006-2011:

• Mortgage rates improved on 49.8% of days; and worsened on 47.8% of days.
• The average mortgage rate winning streak is 1.90 days; the average losing streak is 1.86 days.
• The average MBS gain on a "winning" day is 33.96 bps; the average loss on "losing" day is 33.90 bps.

Over the long-run, the mortgage bond market has been favorable to mortgage rate shoppers. Markets tend to improve on any given day, and when they improve, they do so with larger average movement than a corresponding deterioration, and for more consecutive days.

That kind of news doesn't help rate shoppers today, however. Mortgage bonds have lost 7 straight days and appear poised to lose again.

There's never been a winning streak like that.

Stop Waiting For Rates To Fall. Get Locked Already.

You have two choices here. Wait for rates to fall, or get locked and move on already. You should be leaning toward the latter. Because even if rates come back a bit, they won't retreat to where they were before this mess started.

The steady unwind in mortgage bonds is the natural market cycle. Bonds fell too far last summer, mostly on inertia. Now, that momentum's reversed. Mortgage rates will approach 6 percent before you know it.

Today's rates will look like a bargain.

If you need a rate quote because you want to get locked,. Include some details of your mortgage and what you're trying to accomplish and we see what we can do.