Why Did Mortgage Rates Go Up Over 1.125% in 10 Days?

Forget about that 4.750 percent mortgage rate you passed on last month. It's gone. Today, conforming mortgage rates are bearing down on 6 percent.

For a homeowner in San Diego with a $300,000, fixed-rate home loan, the impact is not insignificant. Since the unofficial start of summer, rising mortgage rates have added $240 to a monthly mortgage payment.

There are two reasons why rates are rising -- one fundamental, and one superstition-like. We can't ignore either.

The fundamental reason rates are rising is that mounting evidence shows the global economy in recovery. There's bound to be setbacks from month-to-month, but overall, the foundation for economic growth appears to be in place.

Unfortunately for active home buyers and shoulda-woulda-coulda refinancers in San Diego and everywhere else, the recovery is coming faster and with more force than was expected. The pace of the recovery is forcing traders to account for longer-term inflation and inflation just kills mortgage rates.

The superstition reason is important, too. It's about heeding trends and patterns -- something Wall Street players call Technical Analysis. It's not that important that you get how Technical Analysis works, you just need to know the basic premise.

Technical Analysis is a pseudo-science; a way of studying markets that says patterns repeat themselves over time. Ironically, in a blatant case of Self-Fulfilling Prophecy, because traders believe in pattern watching, they often cause the pattern to be fulfilled.

This is why mortgage rates sometimes dip and soar for no apparent reason -- their strings are getting pulled by technical traders. And, part of what's driving rates up right now should eventually drop them back down. Maybe not to 4.500 percent, but somewhere close, perhaps.

If you've missed the bottom in rates, there's still hope:

•Technical trading patterns should eventually draw rates back down
•The Federal Reserve will likely accelerate its commitment to low rates
•Mortgage rates tend to be seasonal and cyclical

Make sure you don't miss the next rate drop. It will happen -- we just don't know when.

Of course, you have a day job and have probably spent more time researching rates than you want to already. two terrific ways to get your mortgage rate news are to:

1.Follow me on Twitter at http://twitter.com/wadethompson

2.Get this blog delivered by email each day wtompson@ix.netcom.com

Rates move too fast to rely on slow-to-break stories on TV or in the papers. You'll want mortgage rate news in real-time and you'll want my advice on whether to lock a rate or wait it out for something "better", too. Reach out to me via email and I'll put you on my mortgage rate "watch list".

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Wade Thompson is an active loan officer for all Western States. Reach Wade via email at wtompson@ix.netcom.com or call toll-free to 800-727-5175.