Porcupine Real Estate Blog
Predicting Mortgage Rates
It is impossible to predict the future and certainly the same can be said for predicting mortgage rates. However, if you know how to watch the indicators, you will have some advantage, and it may help you decide whether to borrow funds or wait until rates drop.
Here are a few things to consider to make a more reliable mortgage rate prediction:
History - History can always be a good predictor. What is the economic climate? If rates are high in economic down-times then rates will rise when the same crisis hits the market. Look not only to long-term history but also to recent history. Watch for the changes carefully, and track them by the month. Factors to consider are: Are the rates going up or down? What factors are causing them to behave in such a way?
Influencing Factors - Factors that influence mortgage rates can be controlled by you. For example, the amount of down payment you have or refinancing the amount of equity you have in the home is one such factor. Also, for consideration on the rate you will receive is your debt to income ratio and your credit score. Some factors you cannot influence include the state of the real estate market, the inflation rate, and the funds available for consumers.
Inflation - Inflation drives most everything and always is a consideration of the mortgage interest. If inflation is higher, the interest rate will go up as well. Conversely, if inflation is low rates go down.
Credit Availability - How much credit is available? If limited funds are available, then mortgage interest rates will be higher.
The Bottom Line - Ultimately, you have to be flexible. You can never predict exactly what rates will do. Instead, look to the factors that influence rates. This will give you an idea of where rates are and a better picture of if it is the right time for you to take on a mortgage.