This post has been amended from its original version, which was deemed to have contained 'hate speech' directed toward women. Sorry if I offended anyone, people who know me know this was never the intent as I have an immense respect for people regardless of sex, race, religion, sexual orientation, political views, affinity for certain animals, foods, fonts, music, clothing, etcetera etcetera etcetera...
On with the new post...
Once upon a time there were some pretty reliable indicators when it came to forecasting the near future trends of mortgage rates. Non-farm payroll, unemployment, housing starts, the Consumer Price Index and other such macro view reports we’re accurate arrows in a mortgage professionals quiver when it came to ‘predicting’ mortgage rate movements. Stocks, their indices and mortgage rates moved in opposite directions. A bad day for stocks usually meant mortgages rates fell and vice-versa.
Well you can throw all that logical stuff out the window.
There are days when stocks rise and rates fall. There are days when rates rise and stocks fall.
I pride myself on staying pretty up to date with what goes on in the financial markets, particularly their actions subsequent effects on prevailing mortgage rates…and I have no freaking clue where mortgage rates are going on a daily or weekly basis, no one does. Anyone who says they do is guesstimating at best, and my guess is that even the best market prognosticators are maybe 50% correct 50% of the time. This transcends predicting mortgage rates and into all financial market forecasting...
Its pretty safe to say rates are going to trend upward at some point because they can’t get any lower. Like any other instapundit I can tell you why they moved the way they did after the fact. When money en masse moves into Mortgage Backed Securities, rates go down. When money moves out of MBS positions en masse, rates go up. Outside of that, there are so many variables effectuating the market, I hereby deem predicting the short-mid term direction of mortgage rates with any sort of consistent accuracy logically impossible.
During a time when most market analysts had interest rates rising due to the Fed's ceasing to backstop the MBS market and looming inflation from printing a trillion or twos worth of new Benjamins, the Euro has been getting its behind kicked all around the world because its connected to the troubled economies of PIIG countries (specifically Greece), subsequently strengthening the dollar causing investors to move to the relative safety of US backed Treasuries. Couple that with the new Cowboy of Europe (Germany) banning naked short selling due in part because certain financial institutions were creating mortgage investments that are (secretly) designed to fail...and you have market conditions to keep mortgage rates low.
Yeah, I saw all that coming too...and my great great great great etc. grandfather was Nostradamus.
FTW!
Today's markets are emotionally supercharged and unpredictable, akin to a cat-nipped infused kitty cat with a gun, effected by wide ranging global events and as such there is simply no logical way to predict if rates are going to rise or fall on the short and mid term. Rational economics left with the industrial age and technical investing is quickly following. Floors, ceilings and other traditional technical investment indicators are being shattered and/or crushed. These are the days of behavioral economics where cognitive biases rule over rational decisions. When emotions run high, there’s no telling what happens 4 minutes from now let alone 4 weeks.
If I were in the market for a mortgage, I'd be far less concerned with timing it and just worry about closing the dang loan with rates where they are today...
Disclaimer: If you are a 'cat nipped infused kitty cat', please do not take offense to my analogy, write a follow up post accusing me of slandering the Felis Catus Order or report me to the management of AR and request to remove my post without contacting me directly first...Im sure we can work it out.
If you would like to read the original, unabridged version of this article it can be found here
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