What moves Mortgage rates?

(funny how we've turned into our own "networking gourp"! With all you amazing experts from so many different Industrys! Very cool!)
Mortgage rate movement: I will not be getting very technical here and you'll find out why at the end. One of you asked about the Fed's affect. Thy Fed controls the "Fed Funds" rate. This is the rate that banks pay when they borrower amongst themselves. The only way this really affects us is with Prime. The Prime rate is 3% over the Fed Funds Rate, always! Prime is 5% now, and the Fed Funds is 2%. This affects Home Equity Lines, because they are almost always based on Prime. Prime was 8.25% last year! So the Fed has no direct affect on the 30 year fixed Mortgage rate. Still might see some bounces, like what happened with Clinton-sex-gate, but not as much! Unless of course Bernanke knows Monica as well!
The Bonds guys control the fixed rates. Which really happens when the stock market is tanking, which really happens because of all the crap around the US and the World we have no control over!!! (Confused?) In general, when the stock market tanks, the Bond market does well (because people are moving their money from Stocks to Bonds, "Mortgage Backed Securities"). Considered a "safer" vehicle for your money! ( At least used to be!) When the Stock Market rally's , money moves out of the Bond side back to stocks and the rates go up.
These are all generalizations now. Too many things affect the Mortgage Rates, as noted in the previous Blog! To that end, WHO CARES! If it makes sense for you to buy a home today, for whatever your reasons are....buy it! Get the best rate at that time. You will never guess the rate bottom...and you can always refinance if they drop significantly! Normally we are worried about this issue when the values of homes are rising..(not an issue now)...and in that market you will lose more waiting for the rates to fall, because you will end up paying more for the same house...as you "wait"! You only get "one" shot at the price, you have numerous shots at the rate!

the Mortgage Guy

PS. If you do find a way to predict the rates, I will pay you a billion dollars now and you can retire to an island of your choice...I will sell the idea for ten times that amount and buy the country around your island!