Each Thursday, Freddie Mac publishes a "national" mortgage rate in its Primary Mortgage Market Survey.  Nevermind its flawed methodology -- the Freddie Mac survey does an excellent job of showing whether mortgage rates are rising or falling.

Since early-April, rates are down and down big.

A 4-Month Rally In Mortgage Rates

Going back 18 weeks, week after week, the story is the same. Mortgage rates are falling and making new, all-time lows. You can't open the paper or watch the news without hearing about it.

As for why it's happening, the logic is pretty basic. When the economy hits a rough patch, or when uncertainty rides high, investors prefer to put money somewhere safe and bonds backed by the U.S. government fit the bill.  The U.S. government has never defaulted on debt and its backing is considered a guarantee of repayment. Ergo, U.S. government-backed debt is "riskless".

When investors move into government debt, it's often called a "flight to quality". Mortgage bonds gain on it.  This is because mortgage-backed bonds have the implicit backing of the U.S. government and are considered "safe".

The added demand leads bonds prices higher and, because bond yields move opposite of price, mortgage rates lower.

On April 8, 2010, the average, 30-year fixed mortgage rate was 5.21% -- the high point for 2010.  Since then, however, fears of a renewed recession and general economic malaise have contributed to an ongoing, seemingly-endless rally. There's been very little "good news" to reverse the slide, the constant negativity helped to lower mortgage rates by almost an entire percentage point.

Not since ever have conforming 30-year fixed mortgage rates been this low in Cincinnati.

The Falling Cost Of A 30-Year Fixed Rate Mortgage

Today's low rates have reduced the long-term cost of ownership by a lot.

To validate the math, we look at the interest paid over the life of a loan, plus its upfront costs (i.e. "points"). Naturally, the higher the interest rate, the more expensive the loan's long-term cost.

Comparing 1994 to today:

• In 1994, at interest rates of 9.375%, it cost $900,000 to repay off a $300,000 loan
• In 2010, at interest rates of 4.250%, it costs $540,000 to repay off a $300,000 loan

That's a three-hundred-sixty-thousand dollar difference in just 16 years.  And, 1994 isn't that long ago, either.  There's plenty of people in Cincinnati who've lived in their same home for 16 years. If these same people bought a home today -- at today's rates -- the cost of homeownership would be 38% less. That's huge.

Furthermore, as compared to May 1, 2010 -- the day after the $8,000 federal home buyer tax credit expired -- today's cost of carrying a 30-year fixed rate mortgage to term is lower by $45,500.

That's irony right there.

Mortgage Rates Are Low. Lock In Already.

When we talk about home affordability, it's stuff like this; long-term mortgage costs are down; home values are troughed; lumber and labor are cheap.  It's an excellent time to buy or build a home, all things relative.

It's also an excellent time to refinance.  If you bought a home between 2006 and the early-2010, you should really look at rates vis-a-vis your loan term costs of ownership. Not every family will save 38% long-term on their mortgage, but some of you will.

Get a free, no-obligation quote on your mortgage, .  Or, call me.  I answer my calls and answer all my own emails.

Mortgage rates change all the time so that 4.250 30-year fixed rate might not be available for you if you wait. Therefore, if it makes financial sense to refinance today, do it.

Looking to lock a mortgage rate? I'm a contributor to the Bankrate.com Mortgage Rate Trend Index and this week's survey should give you guidance.

Conforming Mortgage Rate Forecast Only

By way of disclosure, these mortgage rate predictions are for Fannie Mae and Freddie Mae mortgages only. FHA streamline refinances are not covered, nor is the survey specific to mortgage rates in Cincinnati, Ohio or Bethesda, Maryland, for example. Furthermore, unique property types including non-warrantable condos in Florida, condotels in Chicago, 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 predictions for the next week:

• 55% predict mortgage rates will increase
• 5% predict mortgage rates will decrease
• 40% predict mortgage rates will remain unchanged

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 the reason Auto-Tune was invented. It's a double rainbow. OMG.

Either way, here's what I told Bankrate.com:

"The 3-month rally in rates continues (until there's reason for it to end)."

Mortgage rates have been dropping since early-April. Why stop now?

Mortgage Rates Are Falling In Cincinnati. Still.

Next verse, same as the last verse. We've been talking mortgage rates falling for 3 months now.

Here's why it's happening. Mortgage rates are low, not because the housing market is strong, or because the U.S. economy is thriving, but because other nations are struggling and investors want to preserve their capital.

It's called "safe-haven buying". In uncertain times, investors shun risk and move cash to higher-quality assets.

The goal of safe haven buying is capital preservation. A small, safe return trumps the risk of losing it all. Almost like lemmings, investors have decided that the "safe" place to invest right now is in debt backed by the U.S. government. This includes mortgage-backed bonds, of course, which are the basis for conforming mortgage rates.

With the extra demand, bond prices rise and mortgage rates fall. This cycle continues until bond rates get too low for investors to want to buy them. At that point, the market usually reverses for the worse and rates rise.

If You Press Your Luck, You're Bound To Get Whammied

Low rates can't last forever. They just can't.

Today is not "the new normal" -- don't fool yourself into thinking it is. Someday, our children will study the Summer of 2010 in their finance books. What we're witnessing is unprecedented and unlikely to repeat.

Just like folks get nostalgic for the 80s and say, "Remember when you felt lucky to get a 16% mortgage rate?" with a laugh, they'll do the same about 2010. "Remember when rates were in the 4s?"

I mean, srsly, people.  The fours.  What are you waiting for?

In the last few days, "ideal" borrowers have seen their 5-year ARM pricing fall below 3.500 percent with 0 points; the 30-year fixed pricing below 4.375 percent. Really.

If the thought of a refinance has even crossed your mind, talk to your loan officer and get the math. No matter how long you've held your mortgage, there's a pretty good chance that a refinance can:

1. Lower your mortgage rate by a lot
2. Lower your mortgage payment substantially
3. Keep your out-of-pocket costs low

Just don't sit on it. Mortgage markets change rapidly, and without notice. We've seen big, quick rate spikes several times already this year and it could definitely happen again.

Lock Your Mortgage Rate With A Quick Phone Call

Call my office today to give an application by phone. It's a 4-minute call and I can have a guaranteed interest rate in your hand within an hour. My number is 513-443-2020 or, if email is more your thing, and we can get started that way instead.

Either way, it's time to make a move. Rates will fall in the next week, but by how much really? Don't be greedy. Be smart.

If you plan to mortgage your Cincinnati home with a Fannie Mae interest only product, get your loan application together no later than this Friday, June 18.

Interest Only Loans Unavailable?

Starting next week, Fannie Mae is putting major restrictions on the popular "interest only" loan product.  This follows Freddie Mac's earlier announcement to discontinue interest only loans entirely.

As a refresher, an “interest only” mortgage is exactly what its name implies — a mortgage for which the monthly payments consist entirely of interest with no principal due.

Interest only loans do not amortize, and because of that, mortgage payments are lower on a month-to-month basis.

For example, an amortizing, $417,000 mortgage at 5 percent carries a monthly cost of $2,339.  The same payment on a comparable interest only mortgage drops to $1,738.

That’s a payment difference of $601 -- a pretty big deal.

Not surprisingly, the size of the savings is why Fannie Mae is making its guideline change.

Interest Only Mortgages For Financial Management Only

In its official announcement, Fannie Mae says its interest only option is for “borrowers who are in a position to choose it as a financial management tool” and should not be for homeowners just looking for cheaper payments.

Beginning with applications dated June 19, 2010 or later, there are new minimum standards for interest only home loans.

• Applicants must have a FICO of at least 720
• Applicants must have at least 24 months of reserves
• The subject property may only be a 1-unit (i.e. condo, townhouse, single-family)
• The subject property must be a primary residence, or a vacation home

Additionally, cash out refinances are not allowed. Interest only loans are restricted to purchase and rate-and-term refinances only.

Where To Get An Interest Only Mortgage

Interest only home loans aren’t for everyone, but if it's your preference, your options are thinning.

As mentioned, Freddie Mac no longer offers them and Fannie Mae is getting tough. Thankfully, there's places besides Freddie and Fannie where you can "go interest only".  Namely, portfolio lenders.

A portfolio lender is like the anti-bank; a lender that holds loans for profit instead of selling them to Wall Street and portfolio lenders have an appetite for good interest only mortgages -- especially jumbo ones.

If you've been turned down for an interest only mortgage, or just want to know where to find one, call me or .

(Post adapted from Bring the Blog, a blog-writing service for loan officers and real estate agents)

The hardest part about shopping for a mortgage rate is getting an actual mortgage rate.

About The "National" Rate

If you've spent any amount of  time looking for mortgage rates online, you'll find sites touting "national rates" for purchase and refinances.

The most highly-trafficked ones include:

• Freddie Mac's Weekly Mortgage Rates
• Bankrate.com's National Overnight Average
• HSH's Mortgage Rate Survey

And when people visit these sites for "rates", what they're looking is for something akin to a MSRP for Mortgages; a way to keep their lender honest about rate quotes and such.

Sadly, markets don't work that way.  You can't visit a national website for a single mortgage rate any more than that you could watch a national forecast for a single weather report.

And don't just take my word for it -- check out Freddie Mac's region-by-region breakdown. Each area of the country is broken out by its local rates and fees.  The West tends to be more expensive than the Northeast, for example, but with lower mortgage rates.

Furthermore, rates vary by individual -- a characteristic of mortgages that absolutely can't be captured in a national survey.

National surveys are quotes out of context; good for watching trends, but not much else.

There's The Base Rate, Then There's The Adjustments

When you're need an actual mortgage rate quote, the national surveys aren't going to cut it.  You're going to have to speak with a loan officer, or use on an online mortgage approval system to get it.

Even if you're the best of the best of the best with respect to income, assets and credit.

Mortgage pricing has two parts to it, similar to how you buy a suit.

1. There's the mortgage "base rate" -- the suit you buy off-the-rack
2. There's the base rate "adjustments" -- the tailoring of the suit to your fit

As for determining the base rate, Wall Street sets it and there's nothing we can do about it.

Adjustments, on the other hand, are a different story.

Mortgage rates get adjusted for all sorts of reasons.  Some of which you're probably aware of, but most you probably are not:

• What is your loan size? Smaller than $100,000? Bigger than $417,000?
• What is your credit score? Higher than 780?  Lower than 740?
• What is your property type?  Condo? Multi-unit?
• What is your specific loan-to-value? Below 60 percent? Higher than 75 percent?

And, perhaps the most overlooked reason for adjustment: In what state do you live?

Because of adjustments, it's clear that national mortgage surveys are nothing, if not incomplete.  A rate shopper's true rate is not going to be reflected at the Freddie Mac Web site, or on Bankrate.com, or anywhere else -- it can only come from a mortgage lender who's asked specific mortgage-related questions.

Get A Rate Quote You Can Take To The Bank

When you need a "real" rate quote, talk to a loan officer about it. There's too many nuances to do it otherwise.  You can get a real rate quote by calling me direct or just .

I answer all of my own email and Waterstone Mortgage's rates are always great.

Mortgage rates in Cincinnati are low.  Really low.  Like, 30-year-fixed-under-5-percent low.

It's astounding, really.  Mortgage rates weren't supposed to drop this low but that's not stopping people from looking the mortgage gift horse in the mouth.

Mortgage Rates Are Range-Bound

Lately, we've been talking about technical trading. "Technical trading" sounds complicated but it's not.  Technical trading is all about patterns and the markets' tendency to repeat itself over time.

Ironically, technical trading can be a self-fulfilling prophecy. If investors expect a certain pattern in pricing to occur, they make trades around that particular expectation and, ultimately, it happens.

Technical trading may also describe why mortgage rates can't seem to fall too low, or rise too high.  Looking back almost a year-and-a-half, the mortgage bond market can't break a range.

But don't just take my word for it -- check the chart plotting the Freddie Mac average 30-year fixed mortgage rate between December 2008 and May 2010.

Rates break above 5.250 percent and fall below 5.000 at times, but spend most of the time in between.

Freddie Mac Mortgage Rates Aren't "Zero Points" Rates

Right now, we're below 5 percent.  Rates are terrific.  But there's a catch! The Freddie Mac rates aren't "real" rate quotes -- they're partial rate quotes.

Freddie Mac's reported rates don't account for the mandatory discount points required to actually get the rates.  The mortgage rate is only half the puzzle, in other words. To get your loan officer to give you the Freddie Mac rates, he'll ask you to pay an average of 0.7 points at closing.

Alternatively, you can opt for a zero-points loan.  This will result in the lender raising your rate by about a quarter.

Patterns Repeat And 5 Percent Rates Will Return Soon

Mortgage rates are rising. 5 percent, 30-year fixeds will be here soon.

Look at the patterns in the chart to see for yourself.  Last week, mortgage rates fell to the same low levels as 3 times before, and, each time, rates bounced right back to 5 percent:

1. March 2009
2. May 2009
3. November 2009

Oh, and also worth noting?  Mortgage rates haven't come close to that fabled "no closing costs at 4.500 percent" setup that people seem to be holding out for.  It's never existed and, based on patterns, it probably won't.  Not unless you opt for an adjustable-rate mortgage (which is fine, too).

You can send me an email about switching to an ARM if you have questions.

Lock Your Mortgage Rate Before Mortgage Rates Rise

Mortgage rates are unnaturally low today.  They will rise back to 5 percent or higher. Right now, they're less than that.

If you're scouting mortgage rates and wondering what today's pricing look like, and I'll help you get the day's rates for your individual situation.  Rates change quickly so send the email right away. Even one day too late can be one day too late.

It happened last June. Rates rose one full percent in just a week.  Really!

I answer all my own emails.  .

American homeowners are in love with fixed rate mortgages.

Homeowners Are Shortening Loan Terms, Abandoning ARMs

According to a Freddie Mac report of its own mortgage holdings, homeowners that refinance their mortgages are pouring into fixed rate products, regardless of whether their original mortgage was an ARM or a fixed-rate product.

Fixed rate mortgages accounted for 95% of all Freddie Mac-refinances in Q1 2010.

Some other interesting refinancre statistics:

• 25% of homeowners with a 30-year fixed refinanced into a shorter-term mortgage
• 58% of homeowners with a 20-year fixed refinanced into a shorter-term mortgage
• 0% of homeowners with a 15-year fixed refinanced into an ARM

And, speaking of ARMs, the most astounding fact from Freddie Mac is that just 8 percent of ARM-holders opted to refinance into a new ARM.

Considering how favorable ARM pricing has been since the start of the year, and how nearly every Freddie Mac ARM-holder's mortgage rate has adjusted lower since 2007, the tendency of ARM-holders to move into fixed rate loans says a lot about the American homeowner's psyche.

Homeowners are opting for payment predictability over payment savings.

Fear is beating frugality.

Everywhere You Look, Mortgage Money Is Cheap

Short-term uncertainty within global financial markets has created interesting choices for refinancing homeowners.

Normally, at this time of year, mortgage rates are just starting their summer pilgrimage towards 6.5 percent. This year, however, the combination of low inflation, a strengthening U.S. dollar, and nascent concerns of a global banking meltdown has pushed investors toward the mortgage-backed bond market.

ARMs are as low as they've ever been, the 15-year fixed rate money is near 4 percent and the 30-year fixed is back to all-time lows.

Everywhere you look, mortgage money is cheap.

Which Is Better -- ARM or Fixed? Here's How You Know.

So 92 percent of ARM-holders are moving into fixed-rate product.  I understand why, it just doesn't make much sense.  For two reasons, really.

First, as compared to 3 years, 5 years or 7 years ago when an ARM was first originated, the interest rate spread between ARMs and fixed product has gotten bigger.  In other words, the relative monetary benefit in choosing an ARM over a fixed rate mortgage is larger.

And, second, the logical reasons for taking an ARM over a fixed rate mortgage haven't changed.  Maybe you're moving in the next few years; or maybe you want the lowest possible payment; or maybe you're comfortable with adjusting payment risk.

If these reasons are why you picked an ARM a few years ago, it's all still relevant now.

Granted, some of the numbers are likely skewed by the Obama Refi Plan plus recent product limitations, but 92% of ARM-holders suddenly moving to a fixed?  Again, I understand it, it just strikes me as illogical.

Which Refinance Mortgage Is Right For You

Maybe the masses are right. Maybe the best thing to do is to refinance your home into a 15-year fixed rate mortgage and work on agressively paying down your principal.

Or, maybe, what's best for you -- as an individual -- is something else entirely.

You can't know the optimal path for your mortgage until you've asked some good questions and gotten some thoughtful answers.  Let's get started with that right now. and we'll look at your loan, and your options.

Mortgage rates are rock-bottom low. .

Author's Note: Click here for a county-by-county loan limit list.

Conforming mortgages are appropriately named; they "conform" to the mortgage underwriting guidelines of Fannie Mae or Freddie Mac. Mortgages meeting these criteria are securitized on Wall Street as mortgage-backed bonds.

Since 2007, though, as mortgage performance has weakened, Fannie and Freddie's lending standards have tightened.  Today's would-be borrowers are asked to document more income, hold deeper reserves, and show higher credit scores.

One underwriting area that hasn't tightened, however, is the maximum allowable loan size.

Conforming Loan Limits Vary By Property Type

For the 5th consecutive year, the 1-unit conforming mortgage loan limit is $417,000.

As released by the Federal Housing Finance Agency, the official 2010 conforming mortgage loan size limits are, by property type:

• 1-unit properties : $417,000
• 2-unit properties : $533,850
• 3-unit properties : $645,300
• 4-unit properties : $801,950

Note, however, that maximum conforming loan limits vary by market.

Conforming Loan Limits Vary By ZIP Code

Counties in which "typical" home prices dwarf the conforming loan limits are declared "high-cost" areas. Each is assigned a local conforming loan limit that ranges up to $729,750.

For example, a home in Denver, Colorado is capped conforming at $417,000 but a home in Snowmass, Colorado gets clearance to $729,750. Even condos.

The same is true for Mason, Ohio as compared to Athens, Ohio.  Mason's maximum loan size is $417,000.

In Athens, it's $432,500.

Unfortunately, for homeowners in Chicago, there is no break whatsoever.  Chicago's tony neighborhoods -- Lake Forest, Lincoln Park, Hinsdale and elsewhere -- are stuck at $417,000. This is because each of the Chicagoland counties are a melange of housing types and socioeconomic class.

Neither Lake County, Cook County, Dupage County, nor any of the collar counties are considered high-cost.  None has a sufficiently high median sales prices to justify it.

What To Do If Your Mortgage Is "Jumbo"

There are 197 designated high-cost areas in the U.S. and that's just 6% of the country. Most people, therefore, are subject to the 2010 conforming loan limit of $417,000.

If your mortgage exceeds the local loan limit, your mortgage is often called "jumbo" or "super jumbo". The good news is that jumbo and super jumbo mortgages are plentiful -- you just have to know where to look.  And it's not at Fannie Mae.

I lend on jumbo and super jumbos. .

Each week, government-backed Freddie Mac publishes a weekly mortgage rate average compiled from 125 banks across the country.  Based on this week's survey results, home buyers in Cincinnati would be silly to not at least consider the 5-year ARM.

The 5-Year ARM Is A Steal-Of-A-Deal Right Now

As compared to the 30-year fixed, the 5-year ARM is an absolute steal.

Consider this comparison:

• In April 2009, the two products ran neck-and-neck with respect to interest rates
• In April 2010, the two products are split by 0.99 percent chasm

On a $300,000 home loan, that's a difference of $176 per month on a mortgage payment.

Some Folks Are A Perfect Fit For The 5-Year ARM

Now, adjustable-rate mortgages aren't suitable for everyone, but they can be a terrific fit given your individual circumstance.  For example, any of the following scenarios might warrant a 5-year ARM instead of a 30-year fixed:

1. You're buying a home and plan to sell it within the next 5 years
2. Your home is currently financed with a 30-year fixed mortgage and you have plans to sell your home within the next 5 years
3. You have an ARM now and want to get a "restart" on your starter rate

Before opting an ARM, speak with your loan officer about how adjustable-rate mortgages work, and what longer-term risks may exist.  The savings may be tempting, but there's more to consider than just the payment.

How To Apply For A 5-Year ARM At 3.875 Percent

To inquire about a 5-year ARM, call my office at 513-443-2020 or . We can review your situation and if the ARM isn't too risky for your goals, we'll move on to an official application and start working toward closing.

Most new mortgages are closing in 3 weeks.

(Post licensed and customized from the Bring the Blog blog-writing service)

Mortgage rates are low today, but maybe not for you, specifically.

If you've ever wondered why loan officers can't give you the best "advertised rate", it's not because of a bait-and-switch scheme or something worse.  Most likely, you're being quoted higher mortgage rates because of a government mandate called Loan-Level Pricing Adjustments.

Defining Loan-Level Pricing Adjustment

LLPAs are changes in loan costs based on your personal risk traits.

Fannie Mae and Freddie Mac first introduced loan-level pricing adjustments in April 2008 and they've been a cause of consternation among conventional borrowers since.

Loan-level pricing adjustments tend to surprise people because it's not exactly a Prime Time News-type story; the first time most people hear about LLPAs is at the point of application. A loan-level pricing adjustment can raise an applicant's mortgage rate by a full percentage point or more.

How Are LLPAs Determined

To get deep on LLPAs how they work, let's first talk about auto insurance.

For all of us, there is some base insurance rate for which we all qualify.  It's based on our age, our credit and the ZIP code in which we park the car.  From there, however, adjustments are made -- drive a riskier car, pay a higher premium.  Have a history of accidents, pay a higher premium. Things like that.

The same goes for mortgage loans -- the more the risk, the higher the rate. This is LLPA, defined.

A few of the risk factors that can change a person's mortgage rate include:

• Living in a condo with less than 25% equity in the home
• Having a credit score of less than 740
• Living in a 2-unit, 3-unit or 4-unit home
• Using a home as an investment property
• Doing a "cash out" refinance with less than 40% equity in the home
• Having a second mortgage to subordinate

Each of these traits -- historically -- increases the likelihood of your default.    Therefore, to hedge, Fannie Mae and Freddie Mac charge one-time, pre-set fees to offset a potential future loss.

LLPAs Are Not Discretionary Fees

LLPAs are not discretionary fees; sources of profit or padding.  Nor are they junk fees.  LLPAs are mandatory costs triggered by specific loan characteristics.  There's no flexibility, either.  If you trigger the guidelines, you pay the fees.

The Fannie Mae Loan-Level Pricing Adjustment chart is as thorough as it is punitive. At least borrowers get to choose how they pay them:

1. LLPAs can be paid as a traditional "closing cost", due at closing.
2. LLPAs can be built into an interest rate. In general, interest rates increase 0.250% for each 1 percent of loan-level pricing adjustment.

It doesn't take much to trigger the risk-based pricing of Fannie Mae and Freddie Mac; a lot of conforming mortgage applicants do it.

What To Do If You Trigger LLPA

If you've triggered the LLPA chart and want to know your options, call or . Depending on your loan traits, there may be non-government programs that can give the same great rates as Fannie and Freddie, but without the risk fees.

Be sure to ask me about it.  I answer all my own emails and would be happy to help you however I can.

Mortgage rates tend to climb with the mercury. It's been the case in each of the last 4 years.  As spring months turn into summer, the average 30-year fixed mortgage rate rises.

This year should be no different.

The Environment Is Ripe For Rates To Rise

With mortgage rates artificially suppressed -- domo arigato, Mr. Bernanke -- and U.S. inflation expectations at a minimum, the current mortgage rate environment is extremely consumer-friendly. Few people expected 5.000 percent rates to be available this late into a recovery.

But with the economy showing signs that recovery is sustainable, pressure is on for rates to rise.

• Retail Sales data shows consumers are out spending again
• Job growth gets closer to net positive, month-by-month
• Home values have stopped falling, and, in some markets, are rebounding

Each of these factors draws money out of the relative safety of the bond market and into the riskier world of stocks.

Furthermore, the price of gas is rising.  It's up 20 cents per gallon in the last 30 days. No doubt you've noticed. Rising gas prices are inflationary and when gas prices rise, we find that mortgage rates are usually right behind.

The Fed's Buyback Program Ends 8 Days From Now

There's another reason for rates to rise this season, too.  It's the Federal Reserve's mortgage buyback program.

More specifically, its pending ending.

The Fed's buyback program was, by most accounts, a success.  Rates are an estimated one percent lower than they would have been without the Fed's intervention, and the rate drop happened without much disruption in day-to-day mortgage market trading.

However, the Fed's program ends next week.  March 31, to be exact.  And when the Fed leaves the market, there's going to have to be someone to pick up the slack demand or else mortgage rates will have nowhere to go but up. This is because mortgage rates move opposite of mortgage bond prices.

Yields rise as a result.

Beware Of Inflation

Inflation expectations are low for now, but that can change quickly.  It only takes a series of strong economic data to make Wall Street question what's really ahead for the U.S. consumer.  Inflation is the enemy of mortgage rates and its presence makes rates rise.

Therefore, use the mortgage rate chart to your advantage.  You can see what's happened to mortgage rates in each of the last 4 summers -- 2010 should  follow suit.  And when the mortgage market turns for the worse, it's going to turn quick.  Be ready for it.

Get Locked In March Or April

and we can talk about your mortgage situation -- purchase or refinance.  You don't need to lock a rate today -- you just need to be ready to get it done because when it's time, it's time. As soon as you notice rates are higher, it'll probably be too late to do anything about it.

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)

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.

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.

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.