Today’s Interest Rates Predictions
Mortgage rates predictions have been rising over the past year. A number of important factors which influence mortgage interest rates predictions are pushing rates in the same direction. Rising inflation will increase mortgage rates predictions. Higher inflation rates increase mortgage rates predictions because inflation is passed on to borrowers.
The US dollar’s fall against other currencies will put more upward pressure on mortgage rates predictions. This will happen directly, as the government raises official rates to encourage investment capital to remain in the US, and indirectly, as the rising cost of imported goods feeds into inflation. So will a credit squeeze like the current one, and so will the rising risk of foreclosurea and subsequent write-downs of house values.
July’s figures show the impact of the current housing crisis on mortgage rates predictions. Beginning as a sub-prime mortgage crisis, the rot has now spread to the wider economy. Responsible mortgages with a 20% down payment have turned upside down, as house prices in some parts of the country drop 30% or more overnight.
More than 272,000 homes received at least one foreclosure-related notice in July - that is one in every 464 US households, or more than half a percent of all homes. More than 77,000 repossessions were completed in July 2008. Foreclosure filings were 50% higher than in the same month in 2007, pointing to even worse foreclosure figures in the onths to come.
the existence of a large number of homes in foreclosure and pre-foreclosure makes it difficult to sell other homes for their full appraised value. If buyers know there are bargains to be had, they simply don’t make offers on homes at full price.
Bargain-hunting behavior, while predictable, further softens the market and increases the security risk across all loans. If houses are not selling at appraised valuations, then all property offered as security is potentially worth far less than its book value, at lesat for now.
This market softness makes the risk managers in lending organisations somewhat anxious, and they will be recommending higher interest rates for mortgages across the board until the real estate market firms up. This means that mortgage rates predictions are headed upward even further as those recommendations flow through into action.
Mortgage rates predictions can be unreliable, because so many different economic factors influence interest rate predictions. In the current market, all the conflicting economic factors influencing mortgage rates predictions are aligned. This means we can be sure that mortgage rates predictions are heading upward for the next few months, and possibly for the next few years.
