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Are Mortgage Rates Going Down?

Finance: Mortgage

Mortgage rates vary with time to time along with the interest rates but no one can perfectly predict that how the rates are going to be act in the future. When people starting to believe that there no way that the rates is can go further low they drop even more in contrast to the opinion of the most people. This is with out dough that the mortgage rates for 30 year mortgage remain fixed around 4.27% in the first week of October 2010 whereas the mortgage rate on 15 years mortgage is little low at 4%. This looks like that the rates have reached at their minimum limit but one can not say that it will remain on that level as if this current course remain the same then we perhaps will see a 30 year fixed mortgage below 4%.

The first question that came to mind after this is as local market effects the interest rate of individual who get a home loan. Then how the national benchmark on is determined? One reason behind the fluctuation in mortgage rates is that it’s a market and in market it usually occurs where you buy or sold mortgage or packed them into securities. Acting in this way the loans move off balance of the books of the local institutions which free more capital which lead to more mortgage. Investors invest their capital in buying more home loans and in return they hope to get the interest on mortgage as a earning when returned. Investors keep the loans as their investments or they can invest them in mortgage. These securitized bundles can be traded like the normal bonds that traded in the market.

As there is a market for securitized mortgage so it will make sense that it will fluctuate as the stock or bond market. So that market will affect the mortgage rates greatly. This is the market which has a great influence on deciding the rates. Another factor influencing the mortgage rates in is housing market. The rates are set low in order to boost the sales of homes.

So if you want to keep an eye on how the rates are most likely to act. You need to take a look of 10 years treasury notes. These will give you a clear idea that on what is happening in the market. These are considered to be the indicators of what is happening in the mortgage market as those treasury yields will move higher the mortgage rates will also tends to increase and vise versa.

Will Mortgage Rates Stay Low?

As far as this question is concerned there is a good chance that mortgage rate will remain low as long as the economy is languishing and the housing market is sluggish. The reason behind this is that the reasonably safe debts there is no need of high rates to attract investors those selling debts will not pay higher interest to the buyer so these all points are indicating that the mortgage rates will remain low for now at least.



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