The mortgage market is more volatile than it has ever been. In the fifteen years I have been in lending I have not seen a market quite as crazy as the one we have now. We have seen rates drop to a low of 5.25% in the last of January to 6.25% today. The reality is investors are very fearful to put money in mortgage backed securities. Even those held by institutions like Fannie Mae and Freddie Mac. To me this makes absolutely no sense. But these people have seen over 120 Billion dollars in write offs in mortgage backed securities.

What I do know is waiting for rates to drop could cost you. To put into perspective if you borrowed $250,000 the last week of January you would have saved $159 a month compared to today's rates. That is $1,908 a year! It also would have decreased your purchasing power by about 10 to 15% depending on income and other debt.

If you think the mortgage market and credit crunch will unwind itself in the next couple of weeks, waiting may be a good idea. But if you think like I do that we will probably see the problem get much worse before it gets better, acting now may be your best bet.

Another aspect is that if the politicians get in the way and start requiring lenders reduce the principal of loans that are delinquent, they will require much higher rates to ensure the same return.(see Doug's post Wow! This is our Government Talking)