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 shit 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 f*cking 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.
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.
For example, the Euro has taken a beating 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 ban on naked short selling in Germany because financial institutions were creating mortgage investments that are (secretly) designed to fail and you have market conditions to keep mortgage rates low. Yeah, that shit was easy to foresee.
FTW!
Markets are emotionally supercharged akin to an estrogen laced PMS’ing bitch, 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.
