If you are trying to follow mortgage rates, and all you have to go by are mainstream "big media" articles (such as the tear-out above) you will end up confused, misled, and frustrated.
By the time they get around to reporting on interest rates, things have usually changed.
Which has always been the case, but this week has been one of the best examples in recent memory of exactly how and why they get this wrong.
And they get it wrong because the information used by most media outlets to generate the "mortgage rates tumble" type headlines above is the Primary Mortgage Market Survey (PMMS), published right here each Thursday, by Freddie Mac.
And it’s not that the fine folks at Freddie Mac don’t know what’s happening with the mortgage market – it’s just that the data is a weekly average. And if you are trying to find out where mortgage rates actually are on any given day, a weekly average will tell you precisely nothing.
Simply put, here’s how averages will steer you wrong: At the end of a week when rates have been rising, the weekly average will lead you to believe that rates are lower than they actually are. If it’s a week where they’ve been falling, you’ll think that rates are actually higher than they are.
Now, to the casual observer, this distinction may not matter much, and mainstream media articles touting weekly averages are not completely useless.
But to someone who has purchased or is refinancing a home and needs to lock in a rate, following big media’s lead is not only useless, but expensive. Ditto if you are using these sources to determine when to pick up the phone and call your mortgage banker to see about a refinance – the party may already be over.
Now lets get specific. As we mentioned in today’s earlier post, since the consumer price index was released on Wednesday, rates have shot higher by almost .375%. But if you read articles like this, you might believe that rates should be lower today than they were on Monday. And you’d be precisely wrong.
In reality, and hindsight, the best time to lock in a rate in the last week would have been Monday.
What’s the solution? Read this blog, and find yourself a relationship with a mortgage banker that will actively and regularly keep you abreast of changes in the market. Don’t leave this to chance.