A great number of investors, banks and government included, would be happy to accurately predict the direction of mortgage rates!
Even if we know all the relevant data about rates, we will not be able to accurately predict whether rates will fall by ½% or ¼%, or if they grow up next week or next month.
You may guess accurately at times, but the volume of information that affects rates is huge and it is hard to get the right point: you often guess, even if you are accurately guessing… However, we can generally determine where the market of mortgage rates is going and the following advices will gives you some help.
Again, look at what history tells us. If a past collapse in the housing market has led to high interest rates because of increased risks, you can generally expect that trend to repeat.
Conversely, if a hot housing market has driven down rates, you could be almost sure history will repeat itself. But remember this: there still have many unknowns that could distort the trend.
Look also at the projected inflation rate: this will help you identify increase or fall in the home mortgage rates. One of the best sources to get this projection is probably the Federal Reserve Board. They consistently show where they think inflation is headed.
But remember, although Federal Reserve Board set interest rates, they do not control how your mortgage company will behave and how it set its rates.
Another good habit is to watch what other major player of the market and mortgage market are doing. If a large company announces its intention to reduce or increase its rates, you can bet that others will not be too far behind!
But home mortgage rates tend not to change too often: their trends are slow. So, even if you cannot predict if the market will go up or down this time, you still probably just have to suffer ¼% change. It is not so bad. And you can prepare for the next time!
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