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Home Ownership Preparation :: Mortgage Rates Predictions
Mortgage Rates Predictions:
Predictions for 2009 and 2010 Mortgage Rates
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Mortgage rates predictions are as hard to sort through as the critics’ picks for the Academy Awards. Everyone has an opinion and they’re all just a little bit different.
So, if one source is telling you the rates will go up and another source tells you that maybe they won’t or they’ll only go up for certain types of mortgages, how do you know which set of mortgage rates predictions to actually believe?
And what do those predictions actually mean?
Sadly, often no one is totally right when it comes to financial analysis.
However, by reading a range of sources and gaining a broad understanding, you can quickly realize that mortgage rates are falling rapidly right now, but will likely rise within the year. But, why?
Why Are Mortgage Rates Falling?
At the start of 2009, mortgage rates on 30-year, fixed rate mortgages fell for weeks. They’re continuing to fall.
The week ending January 15th, interest rates averaged around 4.96% with a measly 0.7 point. That is low and intended to spur homeowners to refinance mortgages to reduce their monthly payments, but also to encourage new homeowners like you to buy.
The fixed rate mortgage hasn’t been this low since Freddie Mac started in 1971. That’s significant and definitely a call to arms for prospective homeowners.
Why will Mortgage Rates Rise?
Most mortgage rates predictions predict that mortgage rates will go up soon and just in time for a large number of 5-year adjustable rate mortgages to reset.
But, why are mortgage rates set to increase? Well, because federal interest rates are going up and credit is less available.
Credit is tightening, credit ratings are dropping and investors are demanding higher interest rate. Those higher rates are passed on to you, the borrower.
Think of money as a commodity in a basic supply and demand chain. When there’s a credit crunch, the supply is tight which means the cost of money goes up. Those “costs” are interest rates.
How do Higher Rates Affect Me?
If mortgage rates predictions are right and the mortgage rates do go up, most people will opt for adjustable rate mortgages rather than locking themselves into a fixed rate mortgage at a higher interest rate.
Instead, they’ll take their chances that interest rates will eventually fall back down and their adjustable rate mortgage will end up cheaper in the long run.
However, if you’re buying now or in 2009, you may want to consider a fixed rate mortgage.
According to the mortgage rates predictions, locking in the lowest rate since the early 70s could be the smartest financial decision you ever make.
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Home-Ownership-Preparation.com :: Mortgage Rates Predictions