When It's A Holiday Week, Mortgage Rate Shoppers Should Be Extra Vigilant

Real Estate Agent with CONLON/Christie's International Real Estate


Vacation weeks can lead to mortgage market volatility

Mortgage pricing worsened Monday, driving mortgage rates to their highest levels since October.

The day's action was drastic, too. 

Some banks issued as many as 3 rate sheets Monday -- each worse than the preceding and one reason why rates got so bad, so quickly, is because this week marks the beginning of mini-Vacation Season on Wall Street. 

Between now and January 4, 2010, be prepared for big swings in pricing from day-to-day.  Shopping for a mortgage could be a challenge.

The relationship between vacation days and mortgage rate volatility is rooted in how mortgage rates are "made".

  1. Conforming mortgage rates are based on the price of mortgage-backed bonds, a security that is sold on Wall Street
  2. Mortgage-backed bonds can't sell without a bond buyer and a bond seller agreeing to a specific sale price

So, during vacation week, when the total number of market participants are less, there are fewer opportunities for buyers and sellers to meet at a specific price.  As a result, bond prices rise and fall with a higher velocity than on a "normal" day.  Rallies and momentum plays are exaggerated, too.

Now, mortgage market action like this can work in your favor, or it could work out of your favor. Unfortunately, on Monday, rates moved out of favor.

This rest of this week is stacked with market-moving economic data. The data could be better-than-expected, or worse-than-expected.  Either way, markets will react a little more feverishly than normal.  Therefore, if you have a chance to lock a favorable rate, consider taking it.

Before long, the rate could be gone.


Posted by Michael LaFido on December 22, 2009 | Tags: Mortgage Rates

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Associate Broker Falmouth MA Cape Cod Heath Coker
http://www.CapeGroup.com & http://www.REindex.com - Falmouth, MA
Heath Coker Robert Paul Properties Falmouth MA

I don't know which of you posted the same thing first, but at least one of you is a copy cat.


Dec 22, 2009 02:14 AM #1
Michael LaFido
CONLON/Christie's International Real Estate - Chicago, IL
It's Not The Market, It's The Marketing!

My partner and I actually create these blog posts for others in the real estate industry to use on their  own blogs.

Dec 22, 2009 02:24 AM #2
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Michael LaFido

It's Not The Market, It's The Marketing!
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