Mortgage Rate Velocity Accelerates In April; Rates Change Every 4 Hours, 6 Minutes
Posted on May 3, 2010
Filed under On Mortgage Rate Movement
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Mortgage Rate Velocity -- the rate of rate sheet change -- is higher than it's been all year.
Because mortgage rates have become a moving target, life is tough for folks in search of "the lowest rate available". There's barely the time to complete your shopping before lender shift their pricing.
What Makes Mortgage Rates Change?
Mortgage rates are based on the price of mortgage bonds, plus whatever risk-based pricing applies to an individual borrower.
Mortgage bonds are bought and sold on Wall Street. Like stocks, they price on supply-and-demand which, of course, changes minute-by-minute. It follows, therefore, that mortgage bond pricing changes minute-by-minute, too.
This doesn't mean that rates do, though. Instead, mortgage rates rise or fall when bond prices move by a some-number of ticks. Usually, that number is 25 basis points.
Simplified, when the change in bond pricing passes certain threshold, mortgage rates move higher or lower. In April, that threshold was crossed a lot more frequently than in March.
Rates Now Change In The Middle Of Day. Sometimes 3 Times.
In April, mortgage pricing crossed the threshold every 4 hours, 6 minutes, on average.
For rate shoppers in Cincinnati, that stat means that the rate quote you got this morning -- from your loan officer, from your bank's website, or from wherever -- is 100% useless to you by the time this afternoon rolls around.
Pricing crossed the threshold and your rate went bad.
It also means the rate quote you took by email 2 weeks ago from that "online lender" isn't worth the pixels it's printed on. If you're shopping for mortgage right now and want to make sure you get that rate you were just quoted, the best thing you can do it lock it right this instant.
"Thinking on it" overnight only means that you'll lose it.
Shield Yourself From Mortgage Rate Velocity
I track mortgage data in real-time for my clients and summarize it to Twitter and occasionally to Facebook. It's free information and I'm sending alerts before new rate sheets are published.
Follow me online and you'll stay ahead of the market.
My alerts could save your beaucoup bucks over the life of your mortgage but being "alert" is just one part of being ready. You should also have your loan application queued up with a bank before mortgage rates start moving.
Banks won't give rate locks without applications on file.
To give an application, call my office at 513-443-2020 or . And give an application to at least 2 other loan officers, too, for purposes of "shopping around". Don't worry -- your credit score won't be damaged so long as you shop the way I tell you to.
MRV is high and markets move quickly. Be ready to lock and watch for reversal. The interest rate you save may be your own.
Dan Green is an active loan officer. Email or call 513-443-2020. Dan is on Twitter at @mortgagereports.












