Oh, you waited, well you lose but not much

When it comes to mortgage rates, sometimes it’s better to “act now”. (when I tell you)

On Tuesday, Indiana FHA rates fell to the lowest levels that I have seen in nerly 4 years.  Why, because the Fed let it be known that they would “use all available tools in their black bag or tricks” to kick start the economy.

Then by Wednesday, the markets had second and third and fourht thoughts.

When they considered the long-term implications of a near-zero percent(go read that again) Fed Funds Rate and the amount of government intervention to-date Traders became scared that the action the US Gov’t has taken so far would devalue the dollar and lead to…Yes, I dare say it inflation — the arch enemy of low mortgage rates.

Thus causing mortgage markets to unravel like that baseball at the end of the “The Natural”.

At the start, the exit was a slow and orderly. Then it was like someone yelled fire in a movie theater. Investors ran at a full sprint to the exits, and by the end of the day, rates were higher by as much as a half-percent. Thus, nearly all of Tuesday’s great rates were erased.

Hindsight, which is always 20/20, the backtracking on Wednesday was not that surprising at all — it is a pattern in trading that we’ve seen several times this year. The first time was when the Fed’s did the “surprise” rate cut in January, and the other time was after the federal takeover of Fannie Mae and Freddie Mac in late summer.

Sharp rate drops always tend to be followed by an immediate bounce-back!

Unfortunately, not every would-be refinancing homeowner saw the increase coming. There were those that called and locked(when I told them) at the first opportunity to save. They are sitting pretty, the ones that that “waited for rates to go lower” are kicking themselves about it today.

Going forward, mortgage rates may fall, or they may go up. It hard to know, but we have now seen this pattern 3 times — when mortgage rates plunge like they did Tuesday. They hardly stay down for long. When you get a rate you like, get it, grab on with both hands and lock it ASAP.

Sleeping on it may end up costing you.

I am the Mad Mortgage Machine
Dave Woodson