Predicting Mortgage Rates is like forecasting Weather

Trying to predict mortgage rates is very similar to forecasting our weather in our beautiful Pacific Northwest. There are economic indicators with data that result in mortgage rates going down or raising higher just as there are weather patterns and pressure systems that typically indicate sunnier days or a storm approaching. Sometimes the reports that are being relied on can conflict with each other making it more difficult to make an accurate prediction.

Mortgage rates are based on bonds, mortgage-backed securities (MBS) and are traded, similar as stocks are. Once data is released that may impact mortgage rates, markets react…and not always as one would expect based on typical results.

Yesterday, some mortgage professionals may have locked in rates to protect clients from what was expected to be a strong jobs report, which would cause rates to rise. The BLS Jobs Report was anticipated to show that 243,000 jobs were added in the month of April. This morning the jobs report showed only 175,000 jobs were created. Mortgage rates actually improved this morning based on the weaker data.

There are simply no guarantees of what mortgage rates (or the Pacific Northwest weather) will do. Some loan officers don’t follow what’s happening in markets or know what the next economic indicators are that may impact mortgage rates. I think it’s important to understand what is happening with mortgage rates and what *might* impact the direction of interest rates. A home is probably your largest asset, and your mortgage is most likely your largest debt. Although the person you select as your mortgage professional cannot guarantee mortgage rates or flawlessly predict what mortgage rates will be, they should be able to advise you of what pressure system lies ahead so that together, you can make a decision on when to lock in a rate. Some lenders will offer protection for your lock, such as an option to float down your interest rate (sometimes this option has an additional fee – be sure to ask your lender).

My advice? Dress in layers and work with a professional who is informed on what’s going on with the market. I publish a weekly mortgage rate update on this blog addressing mortgage rates. 🤓 If you’re considering buying, remodeling or refinancing your home, I am happy to help you!