Mortgage Rate Shoppers - Beware Of 3 O'Clock

The Wall Street Journal ran an interesting story on Thursday.

The piece talks about Wall Street's 3 o'clock hour and how it's increasingly defining market performance.

Because we're in a down market and investors are highly levered, with each day comes a new batch of forced redemptions and margin calls. To raise cash, beaten-down investors sell stocks and anything else they can to get liquid.

In a normal market, buyers would snap up that supply on the spot, keeping Supply and Demand in balance. In this market, however, buyers are taking a different tact. They're waiting for every last seller to be sufficiently squeezed then that's when the buying begins.

It explains why the last 60 minutes of trading have been game-changing lately -- the market goes supply-heavy to a tipping point, triggering a bona fide demand deluge.

And, because stock prices tend to move opposite from bond prices, when the Dow Jones rallies, mortgage bonds tend to get ransacked. This is terrible for mortgage rates and you've seen this action first-hand if you've shopped for a home loan lately; it's the dreaded "reprice for the worse" phone call from your loan officer that comes just before the Market Close, pushing your prospective monthly payment higher.

We already know that rates change quickly -- every 3 hours and 35 minutes last month -- but the pace is often accelerated in that last hour of trading. If you like the rate on the table at 2:59 P.M. ET, it may be prudent to order the rate lock as soon as possible.