Economic Reports, Market Insight

How to Fight Mortgage Rate Volatility

June 19, 2009 by · 2 Comments 

Mortgage rates are suffering through another volatile week, causing problems for rate shoppers and home buyers.

After falling Monday and Tuesday, mortgage rates surged Wednesday and Thursday. The momentum higher appears to be carrying into the weekend, too.

There are several data-related reasons for the mortgage market’s spastic activity this week:

1. Unemployment claims fell
2. Leading Economic Indicators rose
3. Inflation readings are tame

But while each of the data points above fueled mortgage rate volatility, it’s not the data that’s making markets move the most. It’s the psychological impact of the data.

See, data tells us about the past. It measures and reports on what’s already happened. Unfortunately for rate shoppers, mortgage markets are not made on data from the past — they’re made on the expectations of what will happen next.

Mortgage rates reflect Wall Street’s opinion of the future.

In reading the papers and watching the news, you’ll notice ongoing debate about the U.S. economy. It’s unclear whether the recession is worsening or improving.

On one hand, data is weak and sub-optimal. On the other hand, the data is not nearly as weak as it was 6 months ago and, in some cases, it’s strong. To some, this is a signal that a recovery is already underway.

Or, it may just be a blip.

We can’t be certain in which direction the economy is headed and the same can be said for mortgage rates. Because sentiment is changing so often, though, it forces us to be on our toes.

The last few months have been marked by large mortgage rate swings across small windows of time. A rate that’s offered in the morning, for example, is rarely available in the afternoon. Therefore, do your rate shopping in a compressed period of time and be ready to lock your rate at a moment’s notice.

When markets move, they tend to move quickly.

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James K Barath, CMPS®

James K Barath is a Certified Mortgage Planning Specialist®, Certified FICO® Professional, Certified Military Housing Specialist® and your FHA Home Loan Expert. He is also a graduate of Purdue University, The CMPS Institute, Dale Carnegie Human Relations Course & Napoleon Hill Foundation's PMA Science of Success Class. It's your home and your future. It's his profession and his passion. He is ready to work for your best interest. Contact James for your FREE Home Loan Approval !  His Motto: I Facilitate the American Dream Through Responsible Mortgage Lending and Financial Literacy!

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2 Responses to “How to Fight Mortgage Rate Volatility”
  1. briefs says:

    Refi business is basically gone, those who sat on their hands at 4.5% last month did so at their own risk. The great news is that refis pulled thousands of homes out of foreclosure and off the market, so inventories in NW Indiana have finally dropped.

    Now watch for a summer surge in actual sales of homes to follow, remember rates are still 5.5% or thereabouts

  2. New Jersey Home Mortgage says:

    I appreciate it very much, at least I know from it someone is reading the contents I have here.

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