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Soaring and plunging

By Holden Lewis · Bankrate.com
Thursday, April 15, 2010
Posted: 1 pm ET

The 30-year fixed fell 14 basis points in Bankrate's survey this week. That's about one-eighth of a percentage point. The headline characterizes this drop as a "plunge," which would have been laughable wording when rates were volatile (2003, for example), but is accurate now.

Readers have been e-mailing sharp questions and criticism of my work lately. A couple of readers say the articles and headlines have been overblown by saying that rates "soar" when they rise 12 basis points and "plunge" when they fall 14 basis points. But, as I just said, these are big weekly movements in the context of the last few months.

And there's this, from a reader named Tim:

Please admit in your column that mortgage rates have been about 5.25 percent for over a year, and despite your persistent columns of expecting a spike once the Fed stopped buying, it didn't happen. And you don't know why it didn't happen. And you don't know what will happen next month. And neither do any other economic "scientists."

Your columns are nothing but reading the average that was just published, then forming a bunch of derivative explanations why it must be this way.

Got any actual insights?

I can't argue with the first paragraph, except to note that rates exceeded 5.25 percent continuously from late May to late September last year, and reached 5.95 percent in early June.

As far as the second paragraph, the point of the weekly mortgage analysis is to look at the week's mortgage rates and ask why it must be this way. Tim's criticism stings, because I dislike most market analysis in the mainstream media, which try to impose coherent stories on events that are fractured and disordered. Yet I end up imposing narrative order on chaotic mortgage and housing markets. I do acknowledge doubt, though, as in this week's story, when I write: "But that doesn't explain why rates fell this week. Scott Simon, managing director for PIMCO, the global investment management firm, has a theory."

As for insights, I offer them occasionally, and sometimes they're worth more than you pay for them.

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