Mortgage Rate Predictions: 10 Factors Affecting It

Mortgage Rate Predictions

Mortgage rate predictions are somewhat like gambling since you never know what will happen in reality. Many affluent economic masterminds use historical data combined with modern economic trends and at times mere gut feelings to create their latest mortgage rate predictions.

Many important economic indicators are taken into account, we list 10 factors affecting mortgage rate predictions below.

1. Mortgage backed securities or so called bonds are the top factors in mortgage rate predictions that cause rates to fluctuate several times throughout the business day.

2. Economic reports that are issued by major Government agencies have tremendous impact on mortgage rate predictions and are one of the most essential forecast mechanisms in figuring out potential mortgage rates in the long run.

3. Government actions and economic measures are significant factors affecting purchase and refinance home mortgage rates changes. In the current economy, the Government has been heavily investing in the leading mortgage companies in attempts to keep rates down and encourage home buying.

4. Increasing unemployment rates have direct effect on the mortgage rate predictions and tend to drive mortgage rates down since people buy less housing or even go into foreclosures.

5. Federal Reserve interest rates are additional driving forces for controlling mortgage rate predictions. If the Federal Reserve rates go up, it subsequently leads to higher ordinary and jumbo mortgage rates to compensate for the increased costs of borrowing money from the government.

6. State of economy is another major factor affecting overall home mortgage rates including rates for refinance second mortgage. While sluggish economy will drive mortgage rate predictions down since there’s less interest in buying homes, booming economy will definitely result in higher mortgage rate prediction figures.

7. On the other hand, rising inflation will drive mortgage rate predictions up for a period of time which in theory leads to low demand for mortgages and decrease in rates overtime.

8. Mass media has tremendous influence on consumer expectations and direct impact on their decision to buy or hold off buying housing that in its turn leads to lower or higher mortgage rate predictions.

9. Foreign Exchange Market (FOREX) indicators can possess some impact on the potential fluctuations on the mortgage rates.

10. Unforeseen events of various natures can at times affect mortgage rate predictions like, for example, growth expectations or events of catastrophic proportions.

While there’s no perfect formula for mortgage rate predictions and it could be quite tricky to foresee which way the rates might be going even for savvy economists, timing is important while buying housing and locking in low 30 year fixed mortgage rates.