It is almost impossible to predict the future and predicting where mortgage rates may go can be difficult too. But if you know how to watch the indicators you will have some degree of advantage. It may help you decide whether to borrow funds or wait until rates drop.
Consider that with any prediction there can always be a great deal of margin of error. 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 that you should predict that rates will rise when the same crisis hits the market.
Look not only to long-term history but also to rates recent history. Watch for the changes carefully, 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. One of those factors is the amount of down payment you have or if refinancing the amount of equity you have in the home. 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 constant consideration of the mortgage interest. If inflation is higher, the interest rate will go up as well. Conversely, if inflation is low rates do down.
Credit Availability
How much credit is available? If limited funds are available than mortgage interest rates will be higher.
The Bottom Line
The bottom line is you have to be flexible. You can never predict what the exact mortgage rate will be. 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.
When you are buying a home or selling a home start by working with a seasoned real estate professional who will keep your best interests at heart! I have helped home buyers and sellers for over 25 years. I’ll be there for you throughout the entire process! I can also refer you to reputable mortgage lenders, home inspectors and contractors.
Don’t forget, you can stay on top of Metro West real estate with my FREE monthly newsletter and market updates! The Market Insider report is also free and packed with useful information.
When you have questions about real estate, contact me first! I will provide the latest sales data and the market experience you can trust!
John Savignano
Hopkinton, MA Real Estate Expert
RE/MAX Executive Realty
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