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How Mortgage Rate Predictions Can Make The Homeowners Process Easy

Brandon Hardaway
The market for homes is ever-changing. Luckily there are market rate predictions to help consumers, creditors, and investors. Like anything, they aren’t perfect, but they are generally accurate and serve as a good guide for short and long term trends in the market, as well as an educated prediction of the movement of current mortgage rates. Future borrowers can decide with much better accuracy whether it’s a good time for them to refinance or apply for a mortgage, or whether the current mortgage rates are expected to decrease by reviewing an online mortgage interest rate forecast.

Analyzing mortgage rate history allows potential consumers to enhance their chances of locking in a low rate while saving money at the same time. The smallest changes in mortgage interest rates typically result in noticeable savings, given the fact that mortgage loans last for a long time. When rates drop, people can buy homes with lower incomes, thus allowing businesses to borrow funds more easily. Not to mention that lower rates encourage investors to put their money into mortgage bonds. For those of you with adjustable rate mortgages, mortgage interest rates predictions give some headway as to where rates are heading (higher rate, bigger monthly payment). Mortgage lenders watch the mortgage rate history closely to help them decide if extending credit at a certain time would gain them any profit.

Through extensive chart reading, experts and financial experts allow people to follow, and predict the stability of interest rates of mortgages. They produce mortgage interest indexes by the week as well as mortgage interest rate forecasts that are followed-up weekly as well. They cover many different loan programs such as these:

  • Adjustable rate mortgage (ARM)(i.e. 3, 5, 7 years)
  • Second mortgage
  • 80-20 loan
  • VA loan
  • Reverse mortgage
  • Option ARM
  • Home equity loan
  • Balloon mortgage
  • Jumbo loan
  • FHA loan
  • Cash-out loan
  • Conforming/conventional loan
  • Condominium mortgage
  • Personal loan
  • Interest-only loan
  • 1% loan
  • Fixed mortgage (i.e. 15, 20, 30, 40-year)
  • Bad credit loan

Mortgage and financial websites update their sites with the latest prime rate predictions after each Federal Reserve meeting. The rate predictions never usually change more than .1% at a time. Mortgage rates are constantly influenced by a slew of economic factors and market indicators such as these:

Rates are influenced by supply and demand. Interest rates go up when the demand is high, and likewise, they go down when demand falls.

Stock market
Mortgage rates predictions are also impacted by the stock, bond, and equity markets. Simply put, when the market is doing well, rates go up and when the stock market is not performing well, rates drop.

Economic reports
A mortgage interest rate forecast also relies on the main economic reports (i.e. PPI, CPI) and monthly employment report, which impact the mortgage market to a certain extent.

Condition of the economy
Current mortgage rates depend upon the perceived state of the economy, which is strongly influenced by the inflation and Federal Reserve rates. In a strong economy, goods and services usually are more expensive (aka inflation). If the inflation rate gets too high, the Federal Reserve increases the federal funds rate. Inflation results in higher interest rates. The Federal Reserve meets every six weeks, and gauges the nation's economic climate and also sets rates in accordance with what it perceives is occurring inflation-wise.

Forex market
The foreign exchange market, also known as the Forex market, effects mortgage rate predictions as well.

Anticipated changes in the horizon
Mortgage interest rates are also affected by unexpected events (i.e. growth expectations).

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