AS we Predicted 2 weeks ago...
Conforming mortgage rates rose by 0.625 percent Wednesday. Yes, you read it right. Zero-point-six-two-five percent.
The surprise surge in pricing started shortly after 1:00 P.M. ET, then continued all the way until the market's closing. It was the sharpest one-day surge in mortgage rates in recent history. Perhaps ever.
For mortgage rate shoppers swept up in the surge, monthly payments are now higher by $29 per $100,000 borrowed.
That's a significant shift.
For as rare as Wednesday's events were, though, middle-of-the-day, 0.625 percent rate changes don't just happen. Yesterday, the action was the result of a confluence of factors, including:
Rising oil prices and gas prices
Optimistic predictions about the end of the recession
Concerns over the U.S. total debt load
Fears of inflation
In addition, momentum trading played a role.
As markets worsened, selling begat more selling, amplifying Wall Street's total losses. As mortgage bond prices fell, mortgage rates went up. By a lot.
Mortgage markets are notoriously fickle and yesterday's events proved it. Days like Wednesday are precisely why insiders recommend shopping for mortgage rates in a compressed timeframe. The faster you finish, the lower the risk of losing low interest rates to new market conditions.