When It Comes To Mortgage Rates, You Can’t Stop The World From Happening

• Tweet

This week, mortgage interest rates have bounced around uncontrollably as market try to make sense of the events of the world.

• The Fed says that multiple Fed Funds Rate hikes are within the realm of possibility
• CPI (i.e. the Cost of Living index) shows that consumer prices are responding to inflationary pressues
• Iran's nuclear research programs are back online, driving up gold prices

And then, a new broadcast from Al-Jezeera.  Cue the oil markets...

This week perfectly illustrates why mortgage interest rates can't be predicted with certainty.  There's just many variables.

It's like this: My wife is a Bengals fan.  Prior to the Bengals-Steelers game a few weeks back, the consensus conclusion was that the game was over before it even started -- the Bengals would win in a cakewalk.

On their first series, Bengals QB Carson Palmer connected with Chris Henry for a 50+ yard strike and the game seemed in the bag.  Next, the cameras slowly panned to the backfield to show Palmer still laying on the turf.  Carson Palmer tore his ACL on the play, ending his season.

With their backup QB, the Bengals crumbled and the Steelers went on to win the game handily.

I highlight this game because the same sort of unpredictability exists in global markets that exists on the gridiron -- except in the global economics game, there are no game clocks, or beginnings, or endings. 

The global market is perpetual and new "events" happen all of the time. 

On any given Sunday, anything can happen to shock the mortgage markets and cause rates to run.  You can't stop world events; you can only hope to contain them.

If you are floating your interest rate, lock it.  There's too much risk in floating.