Their Primary Mortgage Market Survey (PMMS) is  a composite of survey responses from Monday, Tuesday and Wednesday.  It’s always a little bit off from “current mortgage rates” just due to the methodology.   Most survey respondents would have completed their response before Wednesday’s barnburner of a run that left mortgage bonds up (and rates down proportionately) 59 basis points.

We’re now in the middle of those all time lows of last October near 4.25% and the recent high of just over 5% that we saw only a few weeks ago.

It’s important to remember that when mortgage rates surged before, almost 10% of the purchasing power of the average home buyer was negated just by the increased mortgage rates.

Spring is hitting the housing market this weekend in the Midwest.  There are two things that are certain in Chicago:  By the time that the orange gets here, you’ll get a worse deal on a home and Zambrano will have had at least one total and complete meltdown in the dugout.  Or he might have a Cy Young year so perhaps only one thing is certain:  you’ll get a worse deal on a home if you’re waiting for 70 degree weather.

This year could be worse.  One part is real estate, the other is mortgage related.

If you’re looking for a move-in ready home that has zero work, zero headaches, so are other home buyers.  Over a third of property is distressed.  Forget Case-Shiller.  Whether or not there is another home buyer writing a competing offer immediately and directly influences the price that you can negotiate. The odds of that increase proportionally with how much red is in our temperature forecast.

Second, mortgage rates might or might not go up, but mortgage costs most certainly will for many first time home buyer loans.  We’ve covered the new FHA MIP on April 18th, that’s a direct increase in costs of .25% for about one third of all loans and a very high percentage of the condo-friendly lending in Chicago.

“Buying power” is a real estate measurement and assumes that all home buyers are financial fools and just spend themselves to the max.  That’s not today’s home buyer.  Forget the impact on your buying power, just call it “cost.”  Your cost on the same home can go up 10% just with a normal swing in rates.   For FHA, there is a guaranteed .25% increase in costs just 31 days from now.

If you’re going to buy this spring, you will save money if you are shopping this weekend rather than waiting 30 days.

The Fed’s $1.25T purchase program is gone and the economy is improving.  Shout if from the mountain tops:  the economy is improving.  From last week:

• Pending Home Sales posted a strong monthly improvement
• Wholesale Trade data pointed to higher consumer spending ahead
• Inflationary threats on the economy are receding, according to the Fed

Furthermore, continuing jobless claims were down again.  Rates should have jumped.

They didn’t.  Continued fears over the Greek mess drove investors to seek safe investments in the US.   Most loans for first time home buyers saw roughly 2/3′s of the prior week’s losses come back last week.  That’s great news.

Mortgage Rate Projections – This Week

If you are a first time home buyer and not under contract, I have a recipe for your long-term financial well-being.  Add equal parts of calmness and urgency.   Find your car keys.  Get your future home under contract.

There are two converging forces and they are big ones:

1. Rates are going to be volatile
2. There are other first time home buyers

For just this week’s rate projections, it could be volatile.  Very volatile.  Any resolution in Greece that removes the widespread panic in the Eurozone means at least .25% to interest rates in a matter of moments.  Beyond that, we have a loaded economic calendar from Wednesday to Friday.  A number of the big reports hit all towards the end of the week including the Consumer Price Index, Retail Sales, Consumer Confidence, and Housing Starts. That’s a lot of data.

The sooner you have a contract, the sooner you can lock in these absurdly low rates.  Rates will go up and they won’t wait until it is convenient for you.

First time home buyers are facing another simple reality:  There aren’t that many great homes in the market.  When a negotiation is a simple negotiation between a buyer and a seller, the offer-counteroffer sequence is pretty simple.  When there is a looming deadline like an $8,000 first time home buyer tax credit, the rules change.  Now, unless you’ve found the least desirable, most overpriced home in the market, you’ll run into multiple-offer situations.  It doesn’t matter what you think “the market” is like.  If a seller has more than one contract in their hands, your price just went up.  Perhaps only $1,000, perhaps only $2,000, but it could be more and it will happen if you wait.  We saw it in November, we’ll see it at the end of the month.

Rates are heading higher.  Possibly this week, possibly next.  If you’re not under contract, you can’t lock a rate.

Get shopping.

They were indeed influential, pushing rates to their highest levels of the year for most first time home buyer loans.   The notable exception was the state programs as those are not typically driven by market fluctuation.

The FOMC minutes point towards a healthier economy that is on its way towards recovery.  That is such welcome news, but means that today’s affordability for first time buyers will be ending.  Four big points drove rates higher yesterday:

1. Re-affirmation that the Fed will no longer be supporting mortgage rates as of March 31
2. The Fed Funds Rate will be rising as the Fed attempts to tighten their  policies
3. Consumer spending is recovering
4. The big one–”higher medium-term inflation.”   Mortgage rates rise when inflation rises.

Overall, the Fed is optimistic and with good cause.  Stronger economies lead to job growth and that is welcome.

If you’re safe in your job and trying to time a first time home purchase, don’t wait.  All of the same signs that point towards higher mortgage rates also point towards higher home prices.