Mortgage Rates Are Random

Luck Definitely Plays a Role In Rate Shopping

Shopping multiple lenders for a “good mortgage rate” can sometimes save you 1/8 percent on your rate and/or a few hundred dollars in fees. However, when it comes to getting the *best* mortgage rate, you’re going to need more than good research skills.

You’re going to need some luck too.

Mortgage rates for people in Iowa or anywhere else, for that matter, are unpredictable, ever-changing, and pretty rarely change as expected.

Just a recent example, when the Federal Reserve left the mortgage market March 31, 2010, analysts said that mortgage rates would rise by a half-percent or possibly more. It was practically stated as fact on TV, heck, I’ve been saying it myself for months. When April 1 came around, though, rates didn’t rise.

Instead, a volcano erupted (literally) and mortgage rates dropped as a result of safe haven buying.

Then, a week later, as the volcano ash cleared out, mortgage rates were supposed to resume their rise. Only they didn’t. Instead, a debt crisis emerged in the Eurozone and mortgage rates dropped again.

You just never know.

Rates Can Go Up, Down & Level Out Again-All in the Same Day

Since March 31, conforming mortgage rates are lower by roughly 0.125 percent, according to Freddie Mac’s famous weekly mortgage rate survey. At today’s rates, the savings are roughly $20 per month per $200,000 borrowed, or $100 per month based on their original, post-March 31 forecast.

It brings us to one of the most important things to know about rate shopping: You can’t shop for good luck.

On some days, rates go higher
On some days, rates go lower
On some days, rates stay the same

Occasionally, there are days when rates do all three.

As a home buyer or would-be refinancer, what rate you get depends on at what time of day you or more specifically, what time of day; you do your shopping.

You can’t predict what will happen next in mortgage markets — even just an hour from now. Therefore, the smartest move, sometimes, is just lock your rate now. At least that way, you’ve got a guarantee.

It’s not always a guessing game though — I follow mortgage rates very closely and generally have a 20 minute warning before I get a rate sheet for the worse. If you’re shopping for a mortgage rate, I’d be happy to help you out. Feel free to email me for advice — I return my own email and I’d love to help!