Mortgage Interest Rates Predictions
Even the most informed mortgage rates forecast can be like weather predictions - it is impossible to be precisely accurate with the mortgage rate forecast, and the further in advance you try to predict mortgage interest rates, the greater the margin of error in the prediction. Your best course of action is to wait until the time you want to take out a mortgage, and use a mortgage calculator to determine how much you can afford, based on the interest rate at the time.
Factors Which Make Mortgage Rates Predictions Rise: Inflation
So called “real interest rates” are calculated assuming that inflation is zero. To get from the “real interest rate” to the “nominal interest rate”, which is what your bank will charge you for your mortgage, you add on the annualised percentage rate of inflation, so mortgage interest rates forecast will increase as inflation increases.
Factors Which Make Mortgage Rates Predictions Rise: Reduced Availability Of Credit
Financial markets operate on supply and demand. Mortgage lenders generally borrow the money they lend for mortgages, or at least 90% of it. Mortgage rates predictions must take into account whether the supply of money is increasing or decreasing.
Factors Which Make Mortgage Rates Predictions Rise: Increased Risk
Apart from the market pricing factors, there is another factor which comes into play in any investment decision - risk. Mortgage rates in general will depend on the overall risk involved in the housing market.
Factors Which Make Mortgage Rates Predictions Fall: Government Intervention
The US Government is an 800-pound gorilla in the financial markets. By issuing Treasury bonds at different interest rates, the government can influence the overall market for money, and thus affect the “real” interest rate. Mortgage rates predictions will consider Federal actions in the markets.
Mortgage rates predictions need to take into account the political imperatives as well as the purely economic influences on interest rates. Voters are particularly sensitive to losing their homes in large numbers, and the government is keen to avoid the scenario in which interest rates go up, and more homes are foreclosed, only to be sold into a plummeting market, further worsening the oversupply problem in residential housing.
Everyone - the government, the banks, and the home owners - are in agreement that this is an outcome to be avoided. Mortgage rates predictions based on purely economic considerations might indicate that mortgage interest rates are due to rise, but while the political pressure is running high, and in an election year, the government will do everything in its power, however economically irresponsible in the long term, to push the interest rate rises off until after the November elections. Mortgage rates predictions must take this political distortion of the financial markets into account.
Mortgage rates predictions are more complicated than weather predictions, because political factors influence mortgage interest rates forecast. This doesn’t make accurate mortgage rates predictions impossible, of course, but it requires more than just a mathematical model to make accurate mortgage interest rates forecast - it takes a good poitical “nose” as well! You can find good mortgage interest rate predictions at the Emergency Refinancing web site.
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