Thanks for visiting The Mortgage Reports. To stay absolutely current on mortgage markets and important guideline changes, be sure to take my free daily email alerts.

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