If you haven't noticed, I took a long hiatus from blogging -- BAD BLOGGER!  Ya, I know what you're thinking, "Just another blogger that gets going then fizzles out -- chalk this one up to just another statistic."  Well, sort of, these last two months mortgage rates have consistently averaged in the mid to high 4.0's%, which has brought an onslaught of business that left me gasping for air at the end of the day.  Hey, I'm not complaining, it was a nice run; a good portion of the business was rate driven refinances which will likely slowdown as mortgage rates have suffered a presipitious climb these last two weeks.

You've been living under a rock if you haven't heard about mortgage rate's recent increase.  As a mortgage professional, its been tough to keep up -- these last two weeks have averaged three rate changes a day, and sometimes four!  I've begun telling clients that rate quotes are good for the minute I quote them, because the market is so volatile, and I could get a re-price for the worse (or better) at any minute.  Therefore, let your mortgage professional know quickly when you're putting an offer on a home, or ready to refinance, so your rate is locked in quickly. 

Mortgage Rates

Rates ended last week about .375% to .5% worse than where they began.  According to Bankrate.com,  a conventional 30-yr fixed rate purchase is averaging about 5.45% nationwide. Much of this change was due to Friday's Jobs Report; although, the report showed the U.S. continues to loose jobs, less jobs were lost than expected -- 345,000 jobs lost in May, vs. 520,000 expectation, taking our unemployment rate to 9.4% from 8.9%.   This caused a rally in the stock market, which sent money flowing out of bonds and into stocks, causing mortgage rates to rise.

Where are rates headed?

According to a panel of mortgage professionals on Bankrate.com,  rates are headed higher with slightly over 1/3 of the panel giving this prediction.   I tend to agree -- over the shortrun we may see some downward movement in rates; however, over the longrun, rates will rise.  Our large government deficits, and monetization of debt will eventually lead to inflation (the arch-enemy of mortgage rates), its just a matter of when and how successful the government will be in combating it.  Even the slightest scent of inflation will increase mortgage rates. 

Should you lock or float your rate?

Whether or not rates will increase or decrease in the shortrun is difficult to predict, as our turbulent times are causing some major volatility.  I recommend calculating your monthly payment at current rates, and locking your rate if it yields you a monthly payment within your budget.  If the rate increase has taken the monthly payment on your home out of your budget, then wait to see if rates drop AND begin looking at other house options within your budget in case rates don't fall.

Forecast for the Week

On Thursday, we'll hear Retail Sales numbers which will have a direct affect on the stock market, this will cause money to flow in or out of bonds, causing rates to fall or rise, respectively.  Remember, as a general rule weaker than expectedd economic data is good for mortgage rates, while positive data causes rates to rise.