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Home Ownership Preparation :: Mortgage Interest Rate Forecast
Mortgage Interest Rate Forecast:
Why a Forecast of Mortgage Interest Rates Isn't Important
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Thanks to a global slowdown and a plummeting U.S. economy, homeowners and consumers may actually see a brighter mortgage interest rate forecast as interest rates are lowered. To avoid a recession, U.S. federal officials will most likely drop rates to stimulate the economy and promote spending.
However, should the interest rate forecast actually play a role in your decision to lock down a rate or stick with the short-term rates? Most economists would say absolutely not. The reason? Your monthly mortgage payment is no place to be playing the interest-rate speculation game.
Risk Tolerance
Given that a mortgage is typically a household's biggest expense, it's no place to gamble, waiting for lower rates. Instead, decisions should be based on risk tolerance.
Your risk tolerance is how you react when your own rates and the mortgage interest rate forecast jumps up and down. And, those rates have been fluctuating and while they're steadier than they were in the mid-nineties, you still never know when a currency crisis or deeper recession could send them skyrocketing.
Handling a Rate Hike
Before waiting on a lower rate, the question you should ask yourself is could you survive a rate hike? If you're loaded with debt and struggling with the current situation, then the answer is no. Regardless of whether forecasts are predicting a lower rate in the new year, you should still lock in now for reliability and stability.
However, if you're in a position where you have some wiggle room and could maneuver your mortgage payments in either direction, then you may have some choices. You know the short term rate will be lower than the long term rate, but you also know that you can comfortably weather the storm when and if it ever comes.
The Ideal Strategy
Regardless of the mortgage interest rate forecast, rates are still at all-time lows and even if there are a few rate cuts coming down the pipeline, after that they can only go up. That makes right now an opportune time to lock into a long-term rate if you have to.
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Home-Ownership-Preparation.com :: Mortgage Interest Rate Forecast