Today, the Federal Open Market Committee voted 9-to-1 to leave the Fed Funds Rate unchanged within in its current target range of 0.000-0.250 percent.

Jobs Are Beginning To Improve

In its press release, the FOMC noted that, since March, the U.S. economy "has continued to strengthen" and that the jobs markets "is beginning to improve".

This is a step up from the last meeting after which the Fed said jobs were "stabilizing".

Today's statement marks the 7th straight press release in which the Fed shows optimism for the U.S. economy.

Furthermore, the Fed has now closed all but one of the programs it created to support markets during last year's financial crisis.  This includes the Fed's MBS Purchase Program.

Economic Threats And Questions Remain

Threats remain to growth, however. The Fed fingered a few:

1. Employers are reluctant to hire new workers
2. High unemployment threatens consumer spending
3. Consumer credit (still) remains tight

Also in its statement, the Fed re-acknowledged its plan to hold the Fed Funds Rate near zero percent "for an extended period".  This was expected.

Overall, the statement's tone was positive and the Fed noted that inflation is within tolerance.

Mortgage Rate Movement Is Neutral Post-Fed

Mortgage market reaction has been muted thus far. Conforming and FHA mortgage rates in Cincinnati are unchanged post-FOMC.  Jumbo and super-jumbo loans are the same as well.

The FOMC’s next scheduled meeting is a 2-day affair, June 22-23, 2010.

The 55-day span between meetings will be the FOMC's longest of 2010.  A lot can happen in 55 days so if the economy takes off in one direction or the other, don't be surprised to see the Fed call an emergency meeting. It called 3 such meetings last year.

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

The Federal Open Market Committee starts a 2-day meeting today, one of 8 scheduled meetings for the year.  Bernanke & Co. are expected to leave the Fed Fund Rates unchanged after the meeting, but that doesn't mean mortgage rates will be unchanged, too.

Au contraire, mortgage rates will be all over the place.

Mortgage Rates Aren't Made On Capitol Hill

The Federal Reserve doesn't control mortgage rates.  Wall Street does. Mortgage rates are based on the price of mortgage-backed bonds plus whatever tiered-pricing may apply. When people in Cincinnati apply for a mortgage, it's Wall Street that sets the price.

The Federal Reserves does, however, set the Fed Funds Rate.  The Fed Funds Rate is the interest rate banks charge each other for overnight cash loans. The Fed Funds Rate is used for a very different type of loan as compared to mortgage rates.

The Fed Funds Rate is a Bank-To-Bank rate. A mortgage rate is a Wall-Street-To-Consumer rate.

In other words, the Fed can't change mortgage rates because its powers don't extend that far.

Checking The Difference Between Mortgage Rates And The FFR

Over the last 20 years, it's obvious how different the Fed Funds Rate is from consumer mortgage rates.

The spread has been as large as 5 percentage points, and as narrow as 1.

• 5.000 percent spread or more : 1992, 2002, 2004, 2009
• 1.000 percent spread or less : 1999, 2000, 2006

Furthermore, going back to 1973-1974, and 1980-1981, the spread went negative.  30-year fixed mortgage rates were higher than the Fed Funds Rate.

If the Fed Funds Rate was directly related to mortgage rates, the spreads would be linear.

However, The Fed Can Influence Mortgage Rates

The Fed can't set mortgage rates with its actions, but it can influence mortgage rates with its words.  And that's exactly what will happen tomorrow.

The Federal Reserve is the nation's central banker and when it talks about an expanding economy and inflationary pressures, it causes bond markets to sell off which, in turn, causes mortgage rates to rise.  Similarly, "down" statements on the economy tend to draw rates down.

The Fed will issue a statement at 2:15 PM ET Wednesday and when it does, mortgage rates will react.  Not because the Fed Funds Rate is different, but because the Fed's press release will highlight the economic strengths, weaknesses and threats to the U.S. economy -- the exact things that make bond markets move.

Today is not a good day to float your mortgage.

A Rate Lock Strategy For The Federal Reserve

If you're not locked in, talk to your loan officer ASAP. There's very little room for rates to fall, and plenty of room for rates to rise. It's a gamble on which you don't want to be on the wrong side.

Or, if you don't have a loan officer, with your details. I'm happy to prequalify you when you're ready.

Need a mortgage rate prediction? I am a weekly participant in the Bankrate.com Mortgage Rate survey and this week's survey may have the answers you need.

Fannie Mae And Freddie Mac Mortgage Rates Only

By way of disclosure, the Bankrate.com survey is for conventional, conforming mortgages only. It does not apply to FHA mortgages nor is the survey specific to Ohio or Illinois mortgage rates. Furthermore, unique property types including non-warrantable condos and condotels may be excluded.

for a real-time rate quote.

Breaking Down The Predictions

Here's the group's mortgage rates predictions:

• 47% predict mortgage rates will increase
• 12% predict mortgage rates will decrease
• 41% predict mortgage rates will remain unchanged

I expect mortgage rates to increase.

My advice not be appropriate for your individual situation and I'm not always right. Ultimately, you may find your time better spent with D'Andre Cole than reading my analysis.

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

"While gas prices rise, so will mortgage rates. Get locked ASAP."

Rates are already pushing north. The best rates of the month have passed.

Gas Prices Are Tied To Inflation

Gas prices are up 10% in the last 2 months and the summer driving season hasn't even started yet.  And more than any other force, rising gas prices can foreshadow higher mortgage rates for homeowners because it's inflationary.

The relationship is indirect but worth a look.

First, the catalyst.  Oil prices rise.  This happens for one of 3 reasons:

1. Growing economies are expected to consume more oil (i.e. more demand for oil)
2. The world's oil exporters reduce drilling capacity (i.e. less supply of oil)
3. The U.S. dollar loses value and oil is bought/paid for using U.S. dollars

We're seeing a combination of all 3 right now.  Economies are expanding, oil availability is down, and the dollar is weaker.  As a result, crude oil is up 20% in the last 2 months.  That's a lot.

Then, as oil prices rise, the higher cost of energy spills into everyday life, creating inflationary pressures and causing mortgage rates to rise.

Inflation is the enemy of mortgage rates.

The Other Reason Mortgage Rates Are Rising

Lately, mortgage rates have been artificially low. There's no good reason why we're seeing conforming mortgage rates at levels like this.  The Fed left the MBS market March 31, 2010 and rates were supposed to rise in response.  But they didn't.

It's because of "safe haven" buying.

Safe haven buying, in a nutshell, is when investors move assets to safe places to avoid a sudden increase in risk somewhere else.  Mortgage bonds, of course, are considered "safe".  They're backed by the U.S. government.

Meanwhile, safe haven buying can be triggered by geopolitics, meteorological events, and financial "problems", among other things. Since the start of the month, we've had all three. Eyjafjallajokull and Greece took most of the headlines and as these events transpired, mortgage rates improved.

The events have now passed.

The ash cloud is gone and Greece secured the IMF's help for its debt.  Safe haven patterns are no longer needed.  Mortgage bonds will unwind as a result.  Mortgage rates will rise.

Get Your Rate Lock Turned In ASAP

There's little to keep mortgage rates low right now.  The Fed is out of the market, the economy is gaining, and safe haven buying is hasta la bye-bye.

It's time to move into locking position. MRV -- Mortgage Rate Velocity -- is as high as its been in a year.  Rate changes are fast and damanging.  If you haven't given a loan application to your loan officer, do it today. The longer you wait, the more this next loan is going to cost you.

Applications-by-phone are a 4-minute process. To give one, call my office at 513-443-2020 or . And be sure to give applications to other loan officers, too. Don't worry -- your credit score won't be damaged if you do it the right way.

Mortgage markets improved yesterday after the Federal Reserve released its March 16, 2010 meeting minutes. It's good news for Cincinnati home buyers and rate shoppers -- rates could have just as easily gone the other way.

The Meaning Of The Fed Minutes

The Fed Minutes is a detailed recap of the debate and discussion that shapes the nation's monetary policy. The notes are dense; it takes 3 weeks to compile them for publication.

As compared to its more well-known, post-meeting press release cousin, the Fed Minutes are extremely lengthy. In word counts:

• March 16 press release : 451 words
• March 16 meeting minutes : 6,152 words

If the press release is the executive summary, in other words, the Fed Minutes are the novel.

A Not-So-Hidden Message On Inflation

The extra words matter.The minutes recount what the Fed did, how the Fed did it, and what the Fed plans to do next. And, in the minutes, Wall Street looks for clues.

This is why the report is important to every rate shopper in the country.

When the Federal Reserve publishes the minutes from its meetings, it leave clues about the groups next policy-making steps.  For example, in March's Fed Minutes, it's clear that the Fed's concern about inflation is hugely diminished and that's a major plus for the mortgage bond market.

Inflation causes mortgage rates to rise. The absence of inflation, therefore, helps them to fall.  This improves home affordability, among other things.

The Fed Explains Why Home Sales Are Strong

Similarly, the Fed Minutes note that real estate sales may have been worse throughout the winter months if not for low mortgage rates and the sense among Americans that home prices were troughing. We may infer, therefore, that rising rates may suppress home sales later this year.

Markets are always looking for clues from inside the Fed and the last meeting's minute signal that the economy is on its way up.  If you're looking for a bargain in the housing market, your window to act may be closing.

Going under contract for home this week or this month? to send me an email and get a competitive rate quote.

(Post licensed and reprinted with permission from Bring the Blog)

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.

Need a mortgage rate prediction? I am a regular participant in the Bankrate.com Mortgage Rate Trend survey and this week's survey may help you.

Conventional, Conforming Mortgage Rates

By way of disclosure, the Bankrate.com survey is for conventional, conforming mortgages only. It does not apply to FHA mortgages or jumbo mortgages. Nor is the survey specific to North Carolina or Texas mortgage rates. Furthermore, unique property types including non-warrantable condos and condotels may be excluded.

for a real-time rate quote.

Breaking Down The Predictions

Here's the group's mortgage rates predictions:

• 33% predict mortgage rates will increase
• 8% predict mortgage rates will decrease
• 59% 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 3rd best Saturday Night Live Opening Monologue of all-time than reading my analysis.

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

"The complete absence of inflation leads rates lower."

For all this talk of the Federal Reserve ending its support for mortgage markets, a more insidious force on rates is inflation.  And without inflation, U.S. mortgage bonds go in demand.

What Is Inflation?

There is a daisy-chain relationship between inflation and mortgage rates and it's a simple one to understand.

First, a definition. Inflation is the devaluation of a currency. For example, if you can buy a loaf a bread, container of milk, and stick of butter for $5 today but the same groceries costs you $5.50 next year -- all things equal -- that's an inflation rate of 10%.

Most people look at this and say "prices went up". That's one way to look at it. Another perspective is that the dollars in our wallet are less valuable than they used to be.

This is how markets view inflation.

Inflation Is The Enemy Of Mortgage Rates

With respect to mortgage bonds, inflation can be devastating.  This is because mortgage bonds are denominated in U.S. dollars and all coupon payments are made in U.S. dollars.  If the dollar is losing value, mortgage bonds become less attractive to investors.

Less demand drives bond prices down which, in turn, push bond yields up. Mortgage rates rise.

Even worse is that it doesn't take actual inflation to make mortgage rates rise.  Even just the threat of inflation can do the job.  This was the case in June 2009 when mortgage rates leaped 1.125% in 10 days.  If you were shopping for a mortgage at the time, you remember how scary it was.  Lenders were issuing up to 5 rate sheets in a day.

But without inflation -- or the threat of it -- mortgage rates can benefit.  And that's what we're seeing now.

• The Federal Reserve says inflation should remain low for a while
• The Producer Price Index is dropping
• The Consumer Price Index is dropping

Each of these points makes market feel like inflation is a ways away. As a result, mortgage bonds are in demand.

No inflation, no rise in rates.  At least for now.

Rate Increases Aren't Out Of The Question

If you need a rate lock, consider taking it this week.  Timing still looks right and locking a rate can never be wrong.  The wildcard here is the Fed's termination of its $1.25 trillion support for mortgage markets.  It's possible that markets could spook when the program ends March 31 and that could send rates northward.

Rates are down 1 percent since the program started and it's reasonable to expect them to give back some -- or all -- of the improvements once the Fed bows out.

You're playing with fire if you ride this out too long. For now, though, float.

Ride It Out, But Be Ready To Lock

Mortgage rates change all the time. Make sure you're not locking too soon. It can be the difference between saving 1/8 percent or losing it. You're going to want your loan officer to help you with timing.

Or, if it's easier for you, with your situation and we'll get you set up with the lowest rate we can.

Need a mortgage rate prediction? I am a regular participant in the Bankrate.com Mortgage Rate Trend survey and this week's survey may point you in the right direction.

The Bankrate.com survey is for conventional, conforming mortgages only. It does not apply to FHA mortgages, veterans mortgages, or jumbo mortgages. Nor is the survey specific to Cincinnati.

for a real-time rate quote.

Here's the group's 30-day prediction for mortgage rates:

• 33% predict mortgage rates will increase
• 27% 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 this video about Poland Spring Water than reading my analysis.

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

"The Fed just bought the mortgage markets another 30 days of low rates."

With consumer confidence on the mend, net job gains nearing zero, and Retail Sales rebounding, Wall Street had bid up mortgage rates this month. Since touching an all-time low (for the 5th time this year) at Thanksgiving, rates had surged by nearly 3/8 percent.

Mostly, the trading was just jockeying for position ahead of the December 15-16 FOMC meeting.

Investors were worried that the Fed would blink; that it would change its economic outlook for 2010 and have to start raising the Fed Funds Rate sooner than forecast; that inflation fears would return.

Instead, none of that happened.

In the FOMC's post-meeting press release, the Fed talked about the economy "picking up" plus stronger jobs and housing markets, but it also said that risks to growth remain. Notably, consumer credit is tight and businesses are reluctant to hire new workers.

And then, to back that up, the Fed made 5 separate comments stating inflation is under control.

Markets didn't know what to make of the Fed's statement. There was a lack of conviction in both directions and that will help rate shoppers in the weeks ahead.  The last thing traders want to do is take on more risk before the New Year and the Fed just gave investors the green light to park cash in bonds.

This includes the mortgage-backed variety, of course.

That said, rate should remain bumpy for the foreseeable future so if you need to lock a rate, talk with your loan officer in advance about selecting the rate that's right for you. Then, set a plan to wait for it.

If you're patient and your rate target is reasonable, you'll probably get the chance to lock.

If you don't have a loan officer for refinancing, just with some notes on your mortgage. I'll bounce back with some answers for you. I handle my emails personally.

So here's a little tidbit: Inflation may be runner hotter (or colder) than the government says. It's a matter of rounding digits.

The story goes like this.

When the Bureau of Labor Statistics presents the Consumer Price Index and Producer Price Index each month, its figures are raw numbers benchmarked against a 1982-starting value of 100.

In 1982, CPI was 100.  Last month, it was 215-and-change.  This tells us that the "Cost of Living" has more than doubled over the past 27 years.

Unfortunately, though, when the government makes it press releases, it doesn't talk in terms of those raw numbers. Instead, it shows inflation in terms of the change from the month prior, expressed as a percentage, rounded to one decimal.

According to the government, consumer inflation fell 0.1% last month.

This is where the problems set in.

Rounding to one decimal place is amazingly imprecise and outright unacceptable for measurements in need of precision.  Economic inflation is one such measurement.

Think about what rounding to one decimal place would do to baseball. Both Ted Williams and Delino Deshields would be career .300 hitters.

Or to math. Solving for Pi would be a piece of cake at 3.1.

Because the government's reporting of inflation is imprecise, Wall Street's perception of the economy is imprecise, too.  This influences the stock market, currency trading, and bonds.  It changes mortgage rates, too.

Inflationary pressure correlates to higher mortgage rates.

Since September 2008:

• Sum of monthly CPI data from the government : +1.8%.
• Sum of non-rounded CPI data from the government : +1.613%

Therefore, consumer inflation is 12% less than what many on Wall Street believe.

If investors were paying attention to this, we would expect mortgage rates to be falling. They're not.  Rates are up again this morning and are now posting 5/8 percent worse from just 3 weeks ago.

Meanwhile, on the other side of the coin, PPI is running hotter than what the government reports.  Few people are watching that, either.

You can't make precise decisions without precise data so remember to look deeper than the headline.  Sometimes, you have to do your own math.  It gets geeky at times, but watching the right data is what separates the accurate analysts from the merely average ones.

If you're watching mortgage rates and need help finding the right time to lock, enlist my help as a loan officer. and we'll map out your plan.

Oil prices are on the move, crossing $80 per barrel for the first time in a year.  The charge can't be coming at a worse time for mortgage rate shoppers.

With Wall Street already in debate about inflation, the surge in crude just adds fuel to fire.

Meanwhile, you may have that noticed gas prices are up this week.  A lot.  Use this as a clue -- higher mortgage rates are coming.

Better than any other "everyday cost", rising gas prices often foreshadow rising mortgage rates.  The relationship between the two indirect, but worthy of an examination.

First, the catalyst.  Oil prices rise.  This happens for one of 3 reasons:

1. Growing economies are expected to consume more oil (i.e. more demand for oil)
2. The world's oil exporters reduce drilling capacity (i.e. less supply of oil)
3. The U.S. dollar loses value and oil is bought/paid for using U.S. dollars

Today, oil prices are rising for all three of these reasons.

As oil prices rise, higher energy costs spill over into everyday life, creating inflationary pressures. Rising gas prices are not the cause of inflation, mind you. They're a symptom of inflation.

Another symptom is the U.S. dollar's devaulation.

Meanwhile, because the U.S. dollar is denomination in which mortgage bonds are priced, when the U.S. dollar loses value, mortgage bonds lose value, too. This makes them a less-attractive investment and bond prices drop.

When mortgage bond prices fall, mortgage rates rise.

Inflation is not yet in bloom in the U.S., but the seeds are planted.  Oil prices are spiking, the dollar is fading, and the government is printing a lot of money.

Mortgage rates are up 0.500 percent from their early-October lows.  They'll likely tack on another 0.500 percent before the New Year.  If you're wondering whether it's the right time to lock, the answer is "yes".  You may have missed the market bottom, but today's rates are terrific compared to what we should see just 8 weeks from now.

To get rate quotes and weigh your choices, so we can talk about your mortgage. I answer all my own emails.

Need a mortgage rate prediction for the next month? I am a regular participant in the Bankrate.com Mortgage Rate Trend survey and this week's survey may point you in the right direction.

The Bankrate.com survey is for conventional, conforming mortgages only. It does not apply to FHA mortgages, veterans mortgages, jumbo mortgages, or super jumbo mortgages. Nor is the survey specific to Cincinnati.

for a real-time rate quote.

Here's the group's 30-day prediction for mortgage rates:

• 67% predict mortgage rates will increase
• 8% predict mortgage rates will decrease
• 25% predict mortgage rates will remain unchanged

I expect mortgage rates to increase.

My advice not be appropriate for your individual situation and I'm not always right. Ultimately, your time may be better spent watching Biz's Halloween Beat of the Day versus reading my commentary.

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

"Mortgage markets respond to a weakening dollar and inflation."

Lately, mortgage bonds have been trading at unsustainable levels.

Despite a growing mound of evidence that the economy is expanding and what looks to be an over-supply of treasury debt, mortgage-backed securities are priced as high as they've been since May.  It's unnatural, really; a hedge against a stock market flop. Or something else.

But forget about why rates are low -- low rates are about to end.

As the U.S. Dollar gets crushed in currency markets, the price of oil is spiking.  And, as that's happening, it looks like consumers are starting to spend again. Put 'em together and you have the recipe for inflation.

At least, that's what Wall Street thinks.

Mortgage bonds can't catch a break this week. Rates are up markedly and seem poised to keep rising through Halloween and into November.  If you're waiting for a market bottom, today may be it.

Stop waiting for the 4.500 percent 30-year fixed and take what the market's giving you. Before long, 6 percent rates will replace 5 percent ones.

Meanwhile, mortgage rates change minute-by-minute. The best way to stay in-front of rate changes is to subscribe near-real time market updates via Facebook or Twitter.  You're more likely to get good rates if know when to lock.

If my advice is helpful to you, or call me so we can work together. My rates are really good.

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.

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.

Lately, we've been in a rising interest rate environment. Fear is prompting Cincinnati homeowners with ARMS  to abandoned their adjustable-rate mortgages in favor of fixed-rate mortgages.

This could be a costly (and ill-timed) move for some of those homeowners, from Hyde Park to Mason.

Throughout periods of rising interest rates, lenders adjust their 30-year lending rates to reflect their projection of the long-term, average interest rate.  So, right now, refinancing households moving into fixed products are paying a handsome premium to do so.

To understand this logic, let's look at lending from a lender's perspective.

In lending to a homeowner for 30 years at a fixed rate, the lender is tying up its money for up to 30 years -- a quantifiable and known risk. "We don't know where rates will be for the next 30 years," the lender's economists will say, "but we think it will average x%."

With the projection in hand, the lender will then offer a homebuyer a slightly higher rate.

See, rather than under-price long-term fixed interest rates, the lender will choose to over-price. Lenders do not want to lose money on their investment in your home and 30 years is a long period of time to tie up funds.

As lenders are building in this long-term premium, homeowners are playing right into the psychology. Just like most people are frightened out of buying into a falling stock market, they are unlikely to take an ARM in a rising interest rate environment.

Homeowners choose fixed-rate products more often in rising interest environments and pay a premium to do so. Conversely, fixed loans are priced at a discount as interest rates come down. and, as expected, customers move to ARMs.

ARMs remain less expensive than fixed rate products on a monthly basis and homeowners should always remember that the mortgage is just one component of an overall portfolio.

Rising interest rate costs should be no more relevant to a homeowner than falling stock values in their portfolio or higher life insurance premiums -- it is simply a diversifiable risk that can be managed