Sunday May 21, 2017

Mortgage Rate Predictions

Gone Are The Days Of Low Interest Rates 

The mortgage rate predictions for 2011 and beyond in the short term was stable; for the long term, it was on the upward bound.

There were many mortgage lenders who were hurt big time from the housing bubble burst (also called the subprime mortgage crisis). These lenders had a vast amount of real estate loans in their hands that went bad.

For that reason, they stopped lending out money for mortgages… even for buyers who had really good credit. According to the banking regulations and rules, there must be certain balances in the banks’ loan portfolio.

It would be best to apply with a lender who hasn’t felt the bad effects that came from the crash of the housing market.

According to mortgage rates predictions that higher rates are coming back… this means you need to apply today! In fact, 30-year mortgage rates may increase to 6.50 percent by the end of the year.

The mortgage rates predictions for 2011 in the long term show rates are on the rise and with hyperinflation immenint look for that trend to escalate.

At the moment there is an ongoing tug of war between two big forces that are affecting mortgage rates.  Each force is taking things in a different direction.

How to know which force will win will mean the knowing the difference between the mortgage rates predictions… what predictions are right and which are just totally wrong.

At one end of the spectrum, you have pressure from the slowing economy to drop mortgage rates. After all, there are many homes on the market and not very many buyers grabbing those homes. The pressure to drop mortgage rates is high. On the other side of the spectrum, you’ve got the increasing inflation.

When there is rising inflation, the interest rates are going to increase as well -

For example: I decide to loan you $500 for 12 months. Inflation takes that $500 to purchase only $450 worth of foods a year from now. Thus, that $500 I loaned you is now just worth $450 when you take inflation into consideration.

If inflation runs at 10 percent every year (with other things increasing more than that) you would need to repay me 10 percent more money one year from now to come out even.

The reason inflation comes about is because central bankers are printing out excess money. The symptom of inflation is the rising prices but they’re not inflation. It’s just the dilution of the money’s value.  It’s diluted because the banks and governments have printed too much money.

Prices are not necessarily going up; it’s the money value going down. When the inflation rate is higher, the yield the lenders demand for you to borrow money will also be higher. Lenders tend to want at least two percent returns, which is two percent higher than the inflation rate.

Inflation will continue to rise because the Federal Reserve is printing money to cover the Wall Street bailout and government deficit spending. It’s highly probable that mortgage rates predictions about higher interest rates are liable to occur.

The economy is heading towards a cliff, the higher inflation will have all lenders demanding higher rates. Thus, the days of low interest rates are over. As it stands, mortgage rates predictions are for higher interest rates this year and next year. 

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