Mortgage Rate Predictions For The Next 7 Days (June 2, 2011)

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Want a mortgage rate prediction for the next week? I participate in the weekly Bankrate.com Mortgage Rate Trend Index survey. This week's results may have your answers.

Conventional, Conforming Mortgages Rates Only

This week's mortgage rate prediction requires some fine print. First, the predictions are for conventional, conforming mortgages in places like Charleston, South Carolina; Cincinnati, Ohio; and wherever else conforming and jumbo-conforming mortgages are available.

Second, FHA Streamline Refinance mortgages are specifically excluded from the survey because FHA Streamline Refis are priced differently from conforming ones. The same is true for jumbo mortgages and USDA loans. Furthermore, unique loan types, like those for investors with 5 or more properties financed, are excluded.

You can click here to get a real-time rate quote.

Breaking Down The Predictions

Here's the mortgage rate outlook for the upcoming week:

• 7% think mortgage rates will increase
• 40% think mortgage rates will decrease
• 53% think mortgage rates will won't change

I expect mortgage rates to decrease.

My advice not be appropriate for your individual situation and I'm not always right. Ultimately, you may find your time better spent watching this Today Show interview with Dr. Rick Marshall.

What I told Bankrate.com : "Until Europe reaches consensus on the PIIGS, rates edge lower."

PIIGS In A Debt Crisis Poke

PIIGS is an acronym. It stands for Portugal, Italy, Ireland, Greece and Spain; 5 Eurozone nations that are respectively struggling with high debt loads and slow economic growth.

But it goes beyond just "slow growth". The credit of both Italy and Spain have been downgraded within the last two weeks, and the other 3 nations have been recently involved in some form of bailout. The PIIGS are in a precarious position, collectively, and the global investment community knows it.

Markets have commenced a Flight-to-Quality. Flight-to-Quality describes a pattern of risk-aversion in which investors sell their risky assets and buy safe ones instead.

Market moves like this can be sloganized: "When in doubt, get out".

Mortgage Rates Falling On Flight-To-Quality

According to Freddie Mac, conforming mortgage rates are down for the 8th straight week this week. The moves have been small, but rates have been lower nonetheless, falling 0.375% since mid-April.

And rates should fall further.

The PIIGS are still in the news with Greece leading the headlines. Just this morning, Greece's debt was downgraded to the fourth-lowest debt rating, just one notch above lowest-rated Ecuador. Ecuador defaulted in 1999 and again in 2008.

Now, a Greece default is thought to be unlikely, but if you're a rate shopper this week, you have every reason to shout Opa! As Greece sags in the credit rating market, and concerns of PIIGS contagion spread, U.S. mortgage bonds should get a boost.

That will drive mortgage rates down, similar to what happened in April/May 2010, marking the start of last year's Refi Boom.

Your Next Step : Get A Rate Quote

Rates are dropping and may fall more, but don't want to wait this one out. The mortgage market can change at a moment's notice -- especially when debt markets and currencies are in play. If the Eurozone bails out Greece and the package is "friendly", mortgage rates will shoot higher.

To get a rate quote on today's rates, do the following:

1. Use my online mortgage rate quote form -- no social security number required
2. Wait for my basic follow-up questions via email and reply
3. Next, I'll get live rates in your hand. You can lock or wait -- your choice.

Expect to have rates in your hand within an hour, during business hours.