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Mortgage rates were more volatile in February than in January, making mortgage rate shopping a little bit more difficult.  Lenders averaged 1.55 rate sheets per day.

What Is A Mortgage Rate Sheet?

A rate sheet is a mortgage bank's "menu". It lists the rate-and-points combination for every product available. Some lender rate sheets are 1 page long; some are 10 pages or more. They include prices for products including:

• 30-year, 20-year and 15-year fixed rate mortgages
• Short-term ARMs like 1-year and 3-year products
• Long-term ARMs like 5-year, 7-year and 10-year products
• All variations of jumbo and super jumbo mortgages
• The complete line of FHA and VA mortgages
• Loans for condotels and non-warrantable condos

Rate sheets change with the market and although last month's rate sheets were relatively change-free as compared to last summer, there were some interesting footnotes.

Under The Surface, Not So Tame

February's mortgage market could be categorized as "on edge". For the most part, rates didn't change intra-day.  It was common for lenders to issue rate sheets in the morning and stick to their pricing through market close.

In February, rates held firm 13 out of 20 days -- 65% of the time. That's more than double December 2009's frequency and the highest of the last 2 years.

On days in which rates did change, though, they changed a lot. There were two days on which rates changed 3 times and one day on which rates changed 4 times.

Prior to last month, we hadn't seen a 4-sheet day since October 2009.

Mortgage Rates Will Change Rapidly In March

As the United States fortifies its economy with slow, steady growth, and as the Federal Reserve withdraws its support for mortgage markets, mortgage rates are poised to spike.  However, sporadic reports of economic weakness have undermined that eventuality.

If you've been floating a mortgage rate in 2010, you've played with fire and not been burned. Going forward, get out the turnout gear. Rates are going to rise -- and they're going to rise quickly.

Be ready for it because you won't see the rate hike in the news until it's too late.  You won't see it in real-time.

But I will.

Get Rate Sheet Updates As They're Happening

As a loan officer, I track mortgage data that's unavailable to the public, and I summarize it online via my Twitter stream and occasionally on Facebook. I send alerts before new rate sheets come out.

Furthermore, if you're actively rate shopping in Cincinnati or Chicago or somewhere else that I lend, make sure to . I work for a self-funded bank and my bank's rate sheets are often cheaper as compared to my peers.

(Author's Note: Thank you, Jake Planton, for your help with research)

People search for mortgage rates on Google.  That's not news.  They type in something like "Cincinnati mortgage rates" and then comb through the results in search of "today's rate".

Except Google doesn't give rates. Google gives links.

Links to random websites or elaborate sieves meant to capture eyeballs and generate applications.  The problem is, most people shopping for rates just want information -- they don't want to be sold something. Not yet, at least.

You can't window shop for mortgages on Google

You can't window shop Google for mortgage rates and it's frustrating.

This is because searching for a mortgage isn't like searching for a book.  You can't eliminate the information asymmetry inherent in mortgages; know the price before you step in the store, so to speak. You really can't know if you're getting the "guaranteed lowest rate".

In the mortgage markets, prices are elusive.

However, in doing the research, people learn a lot about mortgages.

• They learn that mortgage rates are based on mortgage-backed bonds and not the 10-year Treasury Note
• They learn how changes in the Fed Funds Rate change mortgage rates
• They learn that mortgage rates are as ever-changing as stock prices

Beyond that, though, it's an information abyss.

Freddie Mac's weekly survey is instantly out-of-date

When you're looking for mortgage rates, there's no crawler on Bloomberg; no ticker on Google Finance; no section in the newspaper.  Sooner or later, therefore, everyone trips into the Freddie Mac Primary Mortgage Market Survey.  It's one of the most widely-circulated mortgage rate surveys in the country.

Published since 1971, the Freddie Mac survey is the basis for national mortgage rate news, and for Home Affordability studies, and for congressional research, and about anything else mortgage-rate related.  The study is flawed in a big way, however. Huge.

The problem is in the survey's methodology.

According to Freddie Mac, Primary Mortgage Market Survey results are collected Monday through Wednesday, then published to the public Thursday. By design, therefore, the survey lumps mortgage market activity spread across 3 days into 1 single point of data.

Survey results are skewed, therefore, based on the when survey responders get back to Freddie Mac.

Last week, this point was painfully clear. Mortgage rates were down Tuesday morning, but rode the rocket higher Wednesday and Thursday.  It was the worst week for mortgage rates since late-December, actually.  And Freddie Mac missed it -- its survey was compiled before rates went bad.

So, Freddie Mac reported 30-year fixed mortgage rates down by 0.04% from the week prior.  Real mortgage pricing, however, showed rates up three-eighths.

A workaround : How to find actual mortgage rates online

What's a rate shopper to do? Well, for one, stop looking for rates on Google. Consider giving applications to a handful of loan officers and let them track your rates for you. A loan officer can (and will) tell you about your real-time pricing if you ask.

Next, add my Twitter feed to your "online research" library. If you've never been on Twitter, it's ridiculously easy and you can have my near-real-time updates pumped right to your mobile phone, if you'd like.

And, lastly, remember that mortgage rates change all day long. A quote issued in the morning won't be valid in the afternoon.  You have to stay on your toes if you want be ahead of market changes and lock the best possible rate.

In Cincinnati or anywhere else.

(Image adapted from Freddie Mac)

Science experiments can be excellent metaphors at times.

Thursday, shortly after the markets closed, the Federal Reserve announced a 25 basis point increase to the Discount Rate.  The Discount Rate is now 0.750%. Mortgage markets are selling off on the news.

The Era of Low Mortgage Rates may be officially over.

The Psychological Impact Of The Discount Rate

For some context, it's important to understand what the Fed's Discount Rate is and, more specifically, what it isn't.

The Discount Rate is the interest rate that the Federal Reserve charges to banks when banks borrow money from it. Banks typically borrow money from the Fed to beef up their cash reserves because all banks are required to keep as minimum level of cash-on-hand.

The Discount Rate is not the rate at which banks borrow money from each other -- that's the Fed Funds Rate.  Nor is the Discount Rate the benchmark rate at which banks lend money to consumers and businesses -- that's Prime Rate.

Discount Rate is just one of the Fed's many tools to slow or speed the economy and, as of yesterday, it's taking steps to slow growth down.  Or, at least, push some responsibility back to banks.  There's no direct impact on consumers for a move like this, but it's the indirect impact we need to worry about.

In raising the Discount Rate, the Fed implies that the U.S. is strong enough to withstand a shock.  It's the signal for which Wall Street has been waiting.

Mortgage Rates Are Breaking Higher

See, since late-2008, 30-year fixed mortgage rates have moved within a very tight range. With few exceptions, never more than 5.375% and never less than 4.875%.   This was because the bond markets harbored doubt about whether the "green shoots" of the economy were for real. Yesterday, the Fed answered that "Are We?" and "Aren't We?" question.

Clearly, we are.  And that brings us to the science experiment.

Much like a super-saturated solution, the mortgage-backed bond market has been in precarious balance, one crystal away from complete transformation.  Well, Thursday, February 18, 2010, the Fed introduced that crystal.  Loan officers everywhere will forever remember yesterday as the Last Day of Low Mortgage Rates.

What To Expect From Your Loan Officer

The Federal Reserve won't make policy changes over the next few weeks, months, or maybe even quarters, but the damage is done. Bond markets are played 12-18 months into the future and the Fed's move to raise the Discount Rate has traders to change their expectations what's coming down the pipe.

Mortgage rates will rise in response.

If you're in the process of shopping for a mortgage or buying a home, the longer you wait to commit, the higher your mortgage rate will likely be.  Call or and I will send you a rate quote based on what the market is doing today.

Rates are changing very quickly and every day counts.

Mortgage rates regained a sense of calm last month as markets recovered from a tumultuous December.  After shedding 300 basis points to close out 2009 -- that's 3 discount points per loan, by the way -- January's pricing recovered by nearly two-thirds.

Rates eased lower day by day in the first month of 2010 and, more importantly to rate shoppers, rates were mostly steady.

On average, mortgage lenders issued just 1.4 rate sheets per day in January, or 7 per week. Mortgage rates haven't been that stable on day-to-day basis in 10 months.

But first, a definition: What is a rate sheet? A rate sheet is a mortgage lender's pricing menu.  Rate sheets lists the rate-and-fee combinations for every mortgage products under the sun, including:

• 30-year, 20-year and 15-year fixed rate mortgages
• 5-year, 7-year and 10-year adjustable rate mortgages
• All variations of jumbo and super jumbo mortgages
• The complete line of FHA and VA mortgages
• Loans for condotels and non-warrantable condos

If a lender offers it, it's on a rate sheet.

The very nature of mortgage markets means that rate sheets are in constant flux.  It's why a mortgage rate is rarely good for more than a few hours.  Similar to beef or lobster, "market price" changes all the time. You can't rely on last night's menu.

New day, new costs and if your current Good Faith Estimate and/or rate quote is older than 5-and-a-half hours, it's officially outdated. Lenders won't honor it.  It's time to start again.

Now, the good news is that rates are relatively tame.  Getting 5 hours-plus to lock a rate is a gift from the Mortgage Gods.  Unfortunately, though,the last time rates settled in like this, it was just a brief calm in a turbulent time.  Sort of like the eye of a hurricane.

From last March, you can see the "V" shape in the chart above. I suspect we're in a similar situation now.

The economy is recovering quickly, corporate earnings are booming, and the Fed is withdrawing its support for the mortgage market. Sooner or later, mortgage markets are going to sell off.  It hasn't happened yet because demand for U.S debt has been high.

But, as the global economy emerges from this generation's worst recession, investment dollars will even out between the U.S. and elsewhere and, when that does happens, it's yet one more reason for rates to jump.

You'd best be ready for it.

As a loan officer, I watch real-time mortgage market data that's not published to the papers or on TV. If you need to know what rates are doing, you need to be watching my Twitter stream, or following me on Facebook. I post regular updates and tend to alert before rate sheets change.

If you need to lock a mortgage rate, make sure you're getting my updates.

Furthermore, if you're actively rate shopping for a home in Cincinnati, Chicago, or somewhere else that I lend, make sure you ask me for a rate quote. Because I work for a self-funded bank, my rates and fees are often less than my broker peers and especially better than the correspondents.

Be sure to ask me for . I love to work with my readers.

If you want to know where mortgage rates are headed in the future, you may be better off ignoring the experts.

I conducted a 50-week study of the popular Bankrate.com Mortgage Rate Trend Index and it showed that the "expert consensus" on mortgage rates is wrong 3 times more often than it's right.

I am a regular Rate Trend survey participant and have been since 2006.

If you've never seen Bankrate.com's weekly Mortgage Rate Trend Index, it's an informal "future of mortgage rates" poll of loan officers around the country. It's meant to give interest rate guidance to active home buyers and would-be refinancers.

Many survey participants are high-profile and the mortgage rate question posed by Bankrate.com is a basic one:

In your opinion, will mortgage rates move up, down, or remain unchanged 35 to 45 days from now?

Well, mapping the Bankrate survey's majority opinion against Freddie Mac's published mortgage rates 35 days hence, it turns out that the experts guessed right on rates just 23.4% of the time last year.

That's seriously awful. It's less than 1 out of 4. And they're experts.

Now, to be fair, some of the participants fared better than the average including Bankrate.com host Holden Lewis and yours truly. However, predicting mortgage rates remains a huge challenge. Especially 35-45 days into the future.

A lot can change in 6 weeks and last year, a lot did. As the economy dipped and surged, Wall Street tried to come to terms with the future of the economy while Congress and the Fed made new policies to stimulate and/or retard growth, as needed.

Intervention messes with markets and mortgage rates were extremely volatile during the sample period. This is because the mortgage rate that homebuyers see is the result of literally hundreds of factors.

Lenders averaged 1 middle-of-the-day rate change per day last year. That's a lot.

Despite these caveats, though, none of it changes the fact the Bankrate.com survey was actually de-helpful to its readers last year. Homebuyers that relied on the survey for rate lock advice, in hindsight, would have been better off flipping a coin.

According to Bankrate.com, the Mortgage Rate Trend survey is among its most viewed pages on its site. Plus, the survey is syndicated to sites like Yahoo! Business and Fidelity Investments.  Clearly, a lot of Americans are using this thing for rate-locking advice.

It's too bad, really, because the advice they're getting is hardly ever right.

When you need to lock a rate, remember that predicting mortgage rates is a challenge for anybody and the farther out an expert goes on the time line, the more likely his logic will be proved wrong.  Markets and makeup change way too fast.

As a consumer, therefore, the best thing you can do is work with a loan officer that understands how markets move and why they move.  You may not get the best prediction for a rate 2 months into the future, but you'll get an excellent take on what's driving mortgage rates today -- an equally important set of information.

Then, when you can get a heads-up on when rates are rising before it actually happens, that's when you can save yourself some money.  The key is to work with a loan officer that tracks real-time mortgage market data and, more importantly, knows what to do with it.

If you're working with a Call Center-type lender, or just aren't sure whether your loan officer is up to snuff, call or . I track mortgage rates in real-time for all of my clients and I love to work with my blog readers.

Plus, my rates are really good (even if I can't predict them 45 days into the future).

Like in 2006, 2007 and 2008, Autumn 2009 is marked by falling leaves and falling mortgage rates.

The trend looks more like a pattern.

Based on Freddie Mac data of the last 4 years, 30-year fixed mortgage rates rise from January through August, and fall through fall. There's 6 weeks left until January.  The clock may be ticking for today's home buyers and rate shoppers.

Conforming and FHA mortgage rates are sub-5 percent right now and, by most measures, there's no good reason for it.

• The U.S. dollar is extremely weak -- usually a negative force on mortgage rates
• The price of gold reflects a healthy fear of inflation -- usually a negative force on mortgage rates
• The stock market is on a tear -- usually a negative force on mortgage rates

Furthermore, the economy is no longer in free-fall which is the scenario that dropped rates below 5 percent in the first place.  Mortgage rates are poised to rise and, when they do, they'll rise in a hurry.

See, that's the other trend in mortgage rates.  Rates rise much faster than they fall.  Just ask anyone on the wrong side of the Memorial Day Massacre about how that turned out.   As low as rates are now, we could be looking at 7 percent mortgage rates in a flash.

Timing mortgage markets is unpossible.

As a homeowners, it's easy to keep up with rate trends on a weekly basis with the newspaper or the aforementioned Freddie Mac data, but markets move faster than that.  They're minute-by-minute and ever-changing.  Unfortunately, laypersons don't get access to mortgage bond data for free.  Even the U.S. Treasury market fails as a proxy anymore.

So, to keep up with rates as best you can -- follow my feed on Twitter or fan me on Facebook. I post near-real-time mortgage market updates several times per time  and I usually post advance notice on rate changes for the worse.

You can also get a feel for what rates are doing right now by using the "Rate Offer" form at the top-right of this page. If your situation needs more than 8 fields to summarize, .

I answer all my own mail.

If history is an indicator, mortgage rates should ease a bit into 2010.

Data from Freddie Mac since 2006 shows that 30-year fixed mortgage rates tend to rise during the summer months, and fall through the fall.

So far, 2009 is staying true to form.

After a post-Memorial Day mortgage rate run-up, the 30-year fixed idled through June, July and August.  And then, on Labor Day, as if on cue, Cincinnati homeowners caught a break.  Mortgage rates began to drop.

By the first week in October, rates had returned to early-May levels, the damage of the summer unwound.

But for homeowners in want of a refinance, 2009 may not be the year to wait on lower-rates-to-come.  This year -- this year in particular -- is very different from the 3 years prior.  This year, the economy is emerging from recession as opposed to entering one.

Today's market environment is distinctly different from what we're used to.

1. The Federal Reserve is ending its mortgage market support instead of beginning it
2. Legitimate concerns about inflation are resurfacing on Wall Street
3. World economies are showing signs of life, spurring global equity investment
4. The U.S. Dollar is sagging against other currencies, devaluing mortgage bonds

Individually, these events exact a measurable, upward force on mortgage rates.  Together, they could completely wreck today's low-rate environment.

We could be looking at 7 percent mortgage rates in a flash, or rates could ease into the New Year.

Either outcome is plausible and that's why timing a market bottom is so challenging.

As a rate shopper, it's important to know what markets are doing at any given moment.  Unfortunately, there's no authorized source that gives the information for free.  Even the U.S. Treasury market fails as a proxy anymore.

So, to keep up with rates on your own, do it the free way -- follow my feed on Twitter or fan me on Facebook. I post near-real-time mortgage market updates several times daily and -- because I know how the banks play The Rate Game -- I post advance notice about when a rate change is about to happen.

Generally, I'm giving about 15 minutes notice.

You can also get a feel for what rates are doing right now by using the "Rate Offer" form at the top-right of this page. If your situation can't be summed up in 8 simple fields, .

Thursday, Freddie Mac published its weekly mortgage market survey.

The report showed 30-year fixed mortgage rates sub-5 percent, near all-time lows.  Versus October 2008, they're down 1.07%.

The press was eager to report a story like this -- mostly because anytime mortgage rates below 5.000 percent, it makes for good copy.

But for rate shoppers in Cincinnati and Chicago, by the time Friday's business section was delivered, the Freddie Mac survey was woefully out-of-date.  Mortgage rates had already started to rise on a series of newsworthy notes:

• Australia lifted its interest rates, the first major economy to make a move like that
• Members of the Federal Reserve hinted that the Fed may raise rates soon
• Concerns of inflation crept back into the Wall Street psyche

Combined, these elements led to a furious mortgage market sell-off so that by 4:00 PM ET Friday, mortgage rates were posting 3/8 higher than what Freddie Mac said they should be.

Rate shoppers get angry when stuff like that happens.  And, it seems to happen a lot.

Weekly surveys like the Freddie Mac report are good for watching long-term trends in mortgage rates, but they stink for when you need immediate "Lock or Float" advice. Remember, mortgage rates change every few hours so rate surveys are often "stale" before they're even published.

One easy (and free) way to track what's happening with mortgage rates is to fan my Facebook page and/or follow me on Twitter. I post markest updates several times per day and often alert before rates get worse.

From the time I advise to lock rates, you'll generally have less than 15 minutes to contact your lender and commit.  If you've already got a loan application on file, that's plenty of time to execute the trade.

If you don't have an application on file, though, or have trouble reaching your loan officer at a moment's notice, your chances of locking the rate drop dramatically.  It takes time to give an application, issue an approval, and position for locking.  It can take even more time for a lender to check his voicemails and return a call.

Mortgage rates wait for nobody.

I monitor and lock mortgage rates for my clients and do it with an automated system. If you're not getting the service you want or expect from your current lender, call or . I'll manage your rate lock for you and can probably save you some money in the process, too.

This is a short list of things that don't control mortgage rates:

1. 10-Year Treasury Note

Over long periods, the 10-year treasury trends with mortgage-backed securities. On any given day, however, the two can move in opposite directions. You can't watch the 10-year ticker on TV and think you know where mortgage rates are going.

2. The Fed Funds Rate

The Fed Funds Rate is the rate at which banks borrow from each other overnight. A mortgage rate, by contrast, is the rate at which a homeowner borrows from a lender. If the Fed Funds Rate and mortgage rates were connected, this chart wouldn't be so jagged.

3. Ben Bernanke

Ben Bernanke is the Chairman of the Federal Reserve, the group that sets the Fed Funds Rate. His influence on mortgage rates, therefore, is muted. However, Bernanke's Fed has been a buyer of mortgage bonds in 2009 so its influence on rates is somewhat elevated. The buying schedule ends in March 2010.

4. Congress

Congress can sway mortgage markets with policies and rhetoric, but as the legislative branch of the U.S. government, its influence on mortgage rates remains indirect. No matter what it says or does to influence the economy, it's still the traders in the mortgage markets that have to take the bait.

5. Chuck Norris

Although Chuck Norris can beat a brick wall in a game of tennis, his legend is no match for mortgage rates. When markets decide they want to rise, they rise.

There's only one thing that controls mortgage rates -- the price of mortgage-backed bonds. Unfortunately, there's no publicly-available tool to watch how mortgage-backed bonds are changing on an hour-to-hour basis.

As a loan officer, I pay for a premium data feed to track mortgage-backed bonds in real-time. I post semi-regular updates to my Facebook Fan page and to Twitter.

For some people, though, that's not personal enough and I understand.

If I can ever help with your individual rate lock decision or to act as a sounding board for your mortgage ideas, . I answer my emails personally and am happy to help you with strategy.

Based on how the mortgage market's been moving lately, on 2 out of 3 days, a morning rate quote from your lender is going to be expired by the afternoon.  It makes shopping for a mortgage a complicated business.

On average, rates are changing every 4 hours, 2 minutes.

That's really fast and, as a guy who watches mortgage rates for a living, I'll say this -- unless you're willing to accept a higher mortgage rate, don't gamble on trying to score a lower one.

Take every rate offer seriously.  Instead of comparing it to what you want, compare it to what you have.  Saving money is saving money and there's almost never a reason to hold out for that extra 1/8 percent.

It's not like the added savings from that 1/8 percent is going to pay for your retirement or anything. And besides, how much lower can rates really go from today's levels anyway?

With mortgage rates in flux, it helps to know in what direction they're headed.

Here's two ways to stay on top of markets:

1. Follow me on Twitter. I tweet near-real time mortgage market updates.
2. Fan this blog on Facebook. I update like with Twitter, but with helpful links, too.

Or, let's make it more personal.

Call or and we can talk about your personal mortgage rates needs. I'm licensed in a lot of states and if I can't help you personally, I'll direct you to someone that can.

If recent history is an indicator, Labor Day should bring lower mortgage rates with it.

Data from Freddie Mac since 2006 shows that 30-year fixed mortgage rates tend to elevate through the warmer months of May, June, July and August before settling lower into the fall season. This year has stayed true to form.

After tacking on a half-percent post-Memorial Day, mortgage rates never quite recovered and sit near their highest levels of the year.  Rates look poised to dip, however.

1. The U.S. dollar is strengthening internationally, boosting the appeal of dollar-denominated securities. This includes mortgage-backed bonds.
2. The U.S. is showing signs of economic recovery and it's making the recovery without introducing inflationary pressures
3. Equity sell-offs are pushing freed cash into the mortgage-backed bond market

All 3 forces combine to pressure mortgage rates lower -- even as the Federal Reserve winds down its $750 billion mortgage market intervention.

September 1, conventional mortgage rates fell by 1/8.

As a rate shopper, it's tough to know what's happening with mortgage rates in real-time because the CNBC ticker doesn't show MBS pricing like it does for the Dow Jones Industrial Average or for stocks.   Even the U.S. Treasury market fails as a proxy these days.

Mortgage pricing is a complex beast and, unfortunately, Wall Street's raw pricing is protected.

To keep up with rates on your own, follow my feed on Twitter.  I update with market movements several times daily and, because I know how the banks play The Rate Game, I like to signal when a mortgage rate change coming down the pike.  Generally, I'm giving about 30 minutes notice.

This 1-minute video discusses today's mortgage rates, "pattern" trading, and why today may be a good day to get locked in.  If you've been reading this site for weeks in search of rate lock clues, this video spells it out for you.

To get locked, call me or . We'll get you protected before rates start changing.

I recently described mortgage rates as being "range-bound", repeatedly returning to the same 5.250 percent, 0 points marker since last December.

Rather than take my word for it, though, check this chart. It plots the Freddie Mac 30-year fixed mortgage rate from December 2008 to July 2009.

Over the past 8 months, Freddie Mac's reported mortgage rates have carved out a wide range -- from 4.750 to 5.750 percent.

These aren't "true" mortgage rates, per se, because Freddie Mac reports its rates weekly and mortgage rates change multiple times daily. There have been days, for example, when rates moved higher or lower than what's plotted above.  Additionally, Freddie Mac reports rates as if of points were being paid.

To undo the "points", we'd have to increase the charted rates by about 0.2%.

And that brings us back to the initial point: No matter how many times rates go higher or go lower, they keep retracing back toward 5-and-a-quarter.

Also worth noting?  Mortgage rates have yet to come close to the fabled "4 percent" number that's people hang their hats on.  The lowest 0-point rates have we've seen since December is 4.500% and that lasted for less than an hour.

So, to sum up, if you still haven't refinanced your home to a lower rate, or moved from your adjustable-rate mortgage to a fixed rate one, use the chart as your guide.  Consider anything less than 5.250 percent is "good" because, if history is an indicator, rates are likely to pop right back.

To a consumer, one of the most difficult facets of shopping for a mortgage is figuring out just what mortgage rates are doing at any given time.

Despite countless websites and blogs devoted to the topic of mortgage, the most important part of a person's research -- the darn price -- can't be found hardly anywhere online.

It's a horrifying revelation for people vis-à-vis the way we've all been trained to use the internet.  After all, we're conditioned to use the internet as a means to eliminate information asymmetry; to know the price before we ever step foot in the store, so to speak.  That way, we can be sure we're negotiating the best possible deals for ourselves.

Except it doesn't work like that for mortgages.  Prices are elusive.

Through the course of doing mortgage-related research online, most people actually learn a lot about home loans.

• They learn that mortgage rates are based on mortgage-backed bonds and not the 10-year Treasury Note
• They learn the intricacies of how FHA Streamlines work and about MIP refunds
• They learn how Conforming Loan Limits apply to their specific zip code

Beyond that, however, it's an information abyss.

When you want to know what mortgage rates are doing, there's no crawler you can watch on CNBC.  There's no ticker symbol to track on Google Finance.  There's not even a section on the Investor’s Business Daily website for it.  So, in the absence of timely mortgage rate information -- unfortunately -- people turn to whatever information they can find.

And that's when the trouble starts.

One of the most widely-recognized mortgage rate surveys is the Freddie Mac's Primary Mortgage Market Survey.  Published since 1971, it's the basis for national mortgage rate news stories, for Home Affordability studies, for congressional research, and about anything else mortgage-rate related.

The Freddie Mac survey gets a lot of ink in the nation's newspapers and, for most people, it's the only news they hear about whether mortgage rates are rising or falling.

The study is flawed in a big way, however.  Huge.  The problem is with the survey's methodology.

According to Freddie Mac, Primary Mortgage Market Survey results are collected from survey participants Monday through Wednesday, and then published to the public Thursday.  The survey is grouping mortgage rates into a static data point when, in fact, they're anything but static.

It's an egregious example, but across those 3 days last week, lenders issued 9 separate rate sheets with a 1/2 percent spread between them. Survey results were destined to be skewed depending on which day survey participants checked back with Freddie Mac.

Furthermore, because Freddie Mac embargoes the survey results until Thursday morning, there's even another day through which mortgage rates can change.

Again, looking at last week, markets sold off with force Thursday morning, causing rates to rise 0.375 percent before noon.  By the time the Freddie Mac survey was published, therefore, it had zero practical application to rate shoppers in Cincinnati or anywhere else.

The Freddie Mac Primary Mortgage Market Survey reported "average mortgage rates" well below what was actually available at the time its publication.

So, for active home buyers and people wanting to refinance, it's not tough to find information about mortgages, it's only tough to get information about mortgage rates.  Specifically, mortgage rates as they apply to your personal profile.

One solution is to watch my Twitter feed at http://twitter.com/mortgagereports.

If you've never been on Twitter, it's a low-impact workout.  Sign up for a free account, follow me (@mortgagereports), and then check back as often as you'd like.  Whenever you re-visit my Twitter page, you'll see the last series of updates and you can get a feel for whether rates are improving or worsening.  I update the feed several times per day -- more often when markets are turning quickly.

If after some time you find that my Twitter feed isn't "personal" enough for you, and ask to be on the Rate Watch list.  I'll reply back with a request for some basic information and we'll get a feel for today's interest rates as they apply to what you've got going on.  Then, if everything makes sense for you, we can put a Rate Lock agreement in place at your request so that when your target interest rate hits, we'll be ready to lock it on your behalf.

Mortgage rates move quickly and you can't wait for Freddie Mac to tell you what they are.  It's the most heavily-relied upon sources of mortgage rates and it's outdated before it's ever published.  Instead, consider relying on me.

Mortgage rates are rising in this summer but don't look so shocked -- rates seem to rise every summer.

As recorded by Freddie Mac, since 2006, 30-year fixed-rate conforming mortgage rate have made a habit of rising in May, June, July and August before settling down through football season. 

This year, the June Swoon looks especially strong.  Mortgage rates are higher by 3/4 percent versus late-May and we're only at the start of the summer trend.

The biggest reason why mortgage rates are up is because of inflation fears. 

Inflation devalues the U.S. dollar and renders fixed-rate investments -- a set that includes mortgage-backed bonds -- less attractive to investors.  When the dollar worth less, bond repayments are worth less, too.  This is why traders don't like holding mortgage bonds in their portfolios when inflation looms -- it can be a real money-loser.

So, mortgage bond tend to sell-off when inflation is coming which, in turn, causes mortgage-backed bond prices to fall. Lower bond prices yields higher mortgage rates.

Now, it's tough to know what's happening with inflation in real-time because most officially-published government data lags by a few weeks.  However, you can sometimes use your local gas station as a proxy.  Rising gas prices are often considered inflationary so if you notice a rising cost to fill-up is rising, it may be a predictor of higher mortgage rates ahead.

You likely know this already but mortgage rates have soared since Memorial Day.  Soared.  Strangely, it's the most improbable turn of events that everybody and their mother saw coming.

The root of the rise rests in inflation. As in, the fear of.  And this run on rates had been predicted as far back as December 16, 2008 when the Federal Reserve first dropped the Fed Funds Rate to near 0 percent.

There's been massive economic stimulus in the last 9 months and all of it is meant to reverse the current recession.  The problem, though, is that stimulus doesn't take hold overnight.  It can take months for new policy to work it way through the economy.

Think of it like a car stuck in the mud. 

When a car is stuck in mud, the tires spin feverishly in search of traction.  All the while, the driver gives the car more gas and turns the wheel from side-to-side in hopes of finding a grip.  Then, when the tires do catch pavement, the car ends up shooting forward with tremendous force and speed.

This is what Wall Street is fearing will happen to the mud-stuck economy. 

Once the stimulus makes the economy catch pavement, investors think the engine will be pumping way too hard to avoid inflation and that's what causing mortgage bonds to crash.  Inflation is the enemy of mortgage rates.

And, by the way, it's not that there's proof inflation will take hold -- it's just a hunch that it will and that's too bad for homebuyers in Cincinnati and Chicago.  A hunch is all it takes to make mortgage rates take off.

So why now?  It's not like the Fed Funds Rate hasn't been near 0 percent for a half-year, or that the Fed only recently made its $1.25 trillion pledge in support of treasuries and mortgage bonds, right? 

Well, the answer lies in the data.

• Home sales are rising nationally
• Fewer American workers are losing their jobs
• Demand for goods and services is rising globally

And, perhaps most importantly, a closely-watched Cost of Living index came in higher-than-expected for May 2009.

We may not be in Full Recovery Mode just yet, but it's clear that traders don't want to be on the wrong side of the bet.  Wall Street made big profits as mortgage rates fell below 5 percent and stayed there this Spring.  Now, they're cashing in those profits as rates make their way north toward six percent.

The about-face in the bond pits is why mortgage rates have been volatile since Memorial Day and it's making the process of shopping for a mortgage rate very, very difficult.

As advice to rate shoppers, I paraphrase a famous truant: Mortgage rates move pretty fast. If you don't stop and look around every once in a while, you might miss them. 

A lot of lenders offer floatdown services to borrowers just in case rates fall during underwriting.  Absolutely no lenders, however, offer a "Hindsight is 20/20" service that grant you the right to lock yesterday's rates.  If a rate and payment look good now, therefore, tell your loan officer to get it locked in.

Wait longer than 2 hours when rates are volatile, the rate you want is likely to be gone.

Mortgage rates are on the move.

After a two-month period of relative calm, Memorial Day 2009 ushered in a new era of mortgage rate volatility.  Over the last 5 days of trading, mortgage lenders have issued 19 separate rate sheets, or nearly four per day.

Every 2 hours, in other words, mortgage rates are changing and when they change, they change big.

The frenzied pace of change is making it next to impossible for mortgage applicants shop for "the lowest mortgage rate".  By the time a buyer talks to competing lenders and gather the rate quotes, it's time to start the process over again.  It's giving Skyline-style heartburn to home buyers in Cincinnati, for one.

More important than the pace of mortgage rate change, though, is the size of mortgage rate change. Look at the action since last week from a sample of lenders:

• Tuesday, May 26, 2009: Rates up by 0.250 percent
• Wednesday, May 27, 2009: Rates up by 0.625 percent
• Thursday, May 28, 2009: Rates down by 0.250 percent
• Friday, May 29, 2009: Rates down by 0.375 percent
• Monday, June 1, 2009: Rates up by 0.500 percent

These are ridiculously out-sized movements for the mortgage market, a Wall Street niche accustomed to gradual change.  Furthermore, it's making a real impact on household budgets.  The rate hikes since last week have added $92 per month to a $200,000 mortgage -- or, $1,100 per year.

That's the cost of a new washer and dryer set; or a multi-million dollar life insurance policy; or food for a few months.

Long-term, the mortgage market can't sustain this pace. That's one part that's clear.  But to homebuyers, sustainability is a moot point -- homebuyers don't live in the long-term world.  Homebuyers in Cincinnati, Chicago or wherever need mortgage rates now and those rates have been both hit-or-miss, and all over the map. 

Homebuyers under contract are short-term players by every definition and can only hope to cash in some karma on the day they need to lock a rate.

The most challenging part to homebuyers and other rate shoppers is that the movements of the mortgage markets have neither come with warning signals, nor have been followed specific trading Rules of Thumb like "strong economic data makes rates go up".  It's been mostly momentum trading; investors hitching a ride on the sentimental favorite of the day.

For now, a concensus that the global economic recovery is underway is fueling stock markets and it's coming at the expense of bonds.  It's the reverse of the Safe Haven Buying pattern that drove rates down earlier this year while investors shunned all types of risk in their respective portfolios. 

Today, investors clamor for risk.  They're behaving as if stocks will outperform bonds over the next few years and why wouldn't they? The S&P 500 is up 40 percent in the last 3 months and the Dow Jones is up 24 percent over the same period of time. Although past performance is no guarantee of future results, traders tend to gravitate toward numbers like that -- at the expense of the mortgage bond market.

Until it's more clear what's happening with the economy, expect volatility to stay high.  Maybe not half-point-swings-to-mortgage-rates-in-a-day high, but high nonetheless.  Consider getting defensive with your mortgage rate shopping, locking in a rate as soon as you find a payment that makes sense for you. 

As we're seeing first-hand, annual payment swings of $1,000 aren't too uncommon anymore.

After two straight months during which mortgage lenders were apt to let morning rate sheets stand, volatility is returning to mortgage rates.  Over the last 60 days, on average, lenders have released mid-day, interest rate updates on 3 days of the 5-day workweek.

It's making the process of shopping for mortgages a little bit more challenging.

If you didn't know, life has been more than a little weird in the mortgage world lately.  See, all of our lives, we've been taught that mortgage rates moves based on mortgage bond market market.  When mortgage bond prices rise, mortgage rates are supposed to fall.  This is how bonds work.

But markets aren't working the way they're supposed to.

Since mid-March, mortgage rates are only loosely tracking mortgage bond prices.  This is because lenders are flush with stimulus-led business and, therefore, don't need price their loans with razor-thin margins -- there's plenty of loans to go around. 

As a result, the country's biggest banks are turning extra-strong mortgage-related profit and feeling less of a need to be competitive.  The best example of this is a Bloomberg story in which one particular bank admits to inflating its mortgage rates just to slow the flow of new applications.

So, for as long as the banks don't "need" new mortgage business, the 4.500 percent, zero-point rates on which Cincinnati homeowners hang their respective hats is likely remain at bay.  Banks may get that price direct from Wall Street, but they're loathe to pass it on unless they have to.

There is some good news to glean, however. 

Last Wednesday, mortgage rates had their worst 1-day performance in as long as I can remember.  Some friends are referring to it as Black Wednesday.  Over a 90-minute period, mortgage rates rose 5/8 percent as mortgage markets sold off like Frozen Concentated Orange Juice futures.  Lenders passed those changes on post-haste.

It was a 5-rate-sheet day.

But then, on Thursday and Friday, as the mortgage bond market recovered from some of its losses, pressuring rates lower, lenders published 6 separate rate sheets over 2 days.  This is a signal that banks are passing some of the "winnings" back to consumers. 

Last March and April, we didn't see much of that.

Rates will continue to be volatile on a day-to-day basis -- at least until such time as the economy has regained its footing and the government has withdrawn from its market management role.  In other words, it's going to be like this for a while.

In May, on average, mortgage rates changed every 3 hours, 37 minutes.

Mortgage rates often follow Newton's First Law.  Commonly called "inertia", it states that an object in motion tends to stay in motion unless acted upon by an outside force.

In the world of mortgage-backed bonds, an "outside force" take many forms, including:

• Economic events (i.e. jobs and housing data)
• Political events (i.e. N. Korea missle testing)
• Psychological events (i.e. Safe Haven buying)

But of all the outside forces that alter the mortgage rate trajectory, today's most powerful one is the Federal Reserve.  Earlier this year, the Fed pledged $1.25 trillion to the mortgage markets to help keep mortgage rates low. 

It has $820 billion left to spend.

The gist of the Federal Reserve's Agency MBS Program is to create massive demand for mortgage-backed bonds over a short period of time, pushing bond prices higher and, therefore, bond yields lower.   This is why mortgage rates plunged after the Fed first announced the program in December 2008.

Here we are, though, one-third of the way through the year and one-third of the Fed's budget is gone.  Yet, mortgage rates are rising over 5 percent.  This is exactly what the Fed doesn't want to happen.  Therefore, it's entirely possible that the Fed calls an audible on the Agency MBS Program in the coming weeks, changing it in one of 2 ways:

1. Accelerate the pace of its purchases in the next 60 days
2. Increase its mortgage market commitment from $1.25 trillion to something higher

Either action would shake mortgage rates off their current trajectory, causing them to fall; and probably by a lot.

This brings us back to inertia. 

Mortgage rates respond to outside forces and the Federal Reserve may just be the ultimate outside force.  When Plan A didn't work for the Fed, they implemented Plan A-But-Bigger.  Now, if Plan A-But-Bigger doesn't work, it's reasonable to expect Plan A-The-Biggest. 

Remember, the Fed's original plan was to purchase $500 billion in agency debt.  When that was deemed too little money to make a difference, however, the Fed threw another 1-and-a-half times as much cash at the problem. 

Given how rates are rising, we can't rule out this subsequent expansion.

Increasing the size of the Agency MBS Program, or even just accelerating the rate at which bonds are purchased, would cause the rate hikes of the last two weeks to unwind overnight.  It would also provide an ample buffer against rising oil prices and inflation-centric trading that tends to draw mortgage rates up. 

If you're living in Cincinnati, Illinois or elsewhere and fear you missed the Refi Boom of 2009 -- a final Fed intervention might be your last chance to cash in.

When the Federal Reserve talks about the Agency Mortgage-Backed Security Purchase Program, its stated goal is to "foster improved conditions", Fed-speak for "keep mortgage rates low".  The higher rates go, therefore, the more likely the Fed will step in as that outside force.

Should the Fed intervene one last time, be ready to lock in when it happens.  The economy is starting to recover, after all, and once the recovery's complete, the Fed won't need to run its buyback programs anymore.

If you've got a specific interest rate target in mind,  and we'll put a "watch" on it.  When your rate hits, you'll get it.

The monthly chart above shows average conforming, 30-year fixed mortgage rates since 2006. Notice the pattern.

Beginning near the start of May of each year, mortgage rates embark upon a multi-month climb before peaking in late-July or early-August.  Then, into the New Year, mortgage rates recede. 

We're currently on the front-edge of the Summer Rate Spike pattern.

On April 30, mortgage rates began to ascend.  Slowly at first.  Then, this week, they barreled higher.  In some cases, conforming mortgage rates are up by a half-percent. 

The speed and force of the uptick is representative of both the respect and the fear that Wall Street has for Washington and what it's done to stimulate the economy this year.  Investors know the stimuli are working -- they're just scared working too well and will lead to massive inflation.

Inflation is the enemy of mortgage rates and causes them to rise.

Therefore, use the mortgage rate chart to your advantage.  You can see what's happened to mortgage rates in each of the last 3 summers -- it looks like 2009 is about to follow suit.  And when the mortgage market turns for the worse, it's going to turn quick.  Be ready for it.

 so we can prepare your mortgage application in advance.  You don't need to lock your rate today -- you just need to be laced up and ready to come off the bench because when it's time, it's time.  You'll be glad to have been prepared.