Category Archives: Mortgage

Mortgage interest rates forecast: What is it?

The average American household has a mortgage debt of $156,333 according to various facts shared by Federal Reserve. Most home owners invest in mortgage loans when building their dream homes or shifting into an urban flat in a busy city. 14% of homeowners with a mortgage loan have applied for various type of personal loans for people with bad credit. Think about that for a second, 14% of homeowners resort to bad credit loans which has a huge impact on interest rates.

Since owning your own home is one of the important necessities of a family, it does become essential that you understand about the current forecast of mortgage interest. This knowledge would help you extensively when you are undertaking a mortgage loan in the near future. Below for your convenience we have analyzed a few forecasts made by financial experts below.

Mortgage Interest Rates ForecastWhat does Freddie Mac predict?

Freddie Mac is the giant among government sector companies which sells and buys securities which are mortgage backed.  Weekly surveys are undertaken and this was started way back in 1971. Their last year survey had indicated that there would be a drop in the 30 year home loan rates and this happened when the rates dropped to 4.10% in September 2014.

The rate had originally been 4.53%. In 2015 Freddie Mac Company has foretasted that there would be a rise in the area of fixed mortgage rates of 30 years. If this does happen then home owners undertaking new mortgage loans and homeowners who are planning to refinance their mortgage loan because they need to free up quick cash would have to pay higher rates. A representative of the company has spoken in a press release that the fixed mortgage rate would be around 5% for 30 years mortgage loans.

What is the opinion of Mortgage Bankers Association?

The MBA or the Mortgage Bankers Association has another opinion in this matter. Dr Bill Conerly an expert from the National Center for Policy Analysis is of the opinion that mortgage rates of 30 years loans would be up by 6% by the end of 2015. The interest rate would grow as the economy is becoming stronger in nature.

What are the predictions made by Home Buying- Institute?

HBI’s Mortgage Interest Rates Forecast is that the interest rate would be higher in the closing months of 2015. The growth of mortgage interest rates some feel is due to the fact that Federal Reserve is closing up the QE or the stimulus program known as the Quantitative Easing. However experts at HBI feel that the impact felt would be much lesser than what was originally foretasted.

What do economic experts have to say about this?

Many economists had foretasted a sharper growth in mortgage rates in 2015. The main reason being as the Federal Reserve had  began to close away the stimulus program. Here some economist quickly point out the fact that when the Federal Reserve started reducing their purchase levels of bonds, the mortgage rates reduced considerably. The rates fell by 0.43% during the last months of 2014 and in the beginning months of 2015, the rates started gradually increasing.  Thus economic experts recommend the forecast made by Freddie Mac is important and also maintain that these rates are rising as the economy is being revived considerably.

Average mortgage rate: How is it determined?

American Community Survey undertook a study recently and the results from the studies indicated that one out of every three Americans stay in a home for which they have paid their mortgage loans. When discussing about mortgage rates, you have to understand that there are of two variations. The Fixed mortgage rates have a fixed higher interest rate which is consistent throughout the loan repayment pattern. The adjustable mortgage rates which fluctuates periodically depending on the mortgage rate currently in the market. Here the Average Mortgage Rate is calculated generally.

Average Mortgage RateHow are these interest rates determined?

The main banks of a company determine the interest rates which need to be paid by a mortgage home owner. In USA there is a special forum which holds monthly meeting every 8months and studies the economy conditions of the country. Based on these facts the interest rate is set. People who are part of this forum are important people from Federal Reserve Bank and Federal Reserve Board. The forum is commonly known as the Federal Open-Market Committee.

What do you understand about the Federal Reserve?

The standards for most monetary policy in United States are set by the Federal Reserve. In USA they are around 12 Federal Reserve Bank unites and they are distributed in important US cities. Here they are under the reviews of Congress but they can take independent decisions regarding the country’s economy. The Federal Reserve earn money for the country through various interest collected in loans, dividends earned on foreign currency and various interests earned thru governmental loans.

How do you calculate the interst rates?

When the Federal Open-Market Committee has their monthly meetings they study the current economy situation of the country and also judge the liquidity that is available for funds. Here the basic formula is when the circulation of money in the country’s economy is abundant, the rates would increase and when it is in bad shape the rates would decrease. Here the rates would be calculated on a average basis. The main objectivity of these people is to keep the country’s economy stable and the employment scenario full.

What roles does the central bank play here?

When understanding about average mortgage rates, you have to understand that the central bank loans the money to the local retail banks at an interst rate which is largely discounted. The ordinary home loan owner takes the loan at an interest rate which is based on the amount of loan he undertakes and the duration of the loan. A common tactics undertaken by central bank would be to increase the average mortgage rates when they feel that they should deposit money and use the money for other purposes. The same bank would lower rates when they want the consumer to increase their spending.

What are the average mortgage rates?

The average mortgage rate would depend on the borrower’s current credit score, the first down payment that he has made and the specific loan variation that he has taken.  The average mortgage rate currently for 30 years is 4.19%. For 15 years the rate is 3.34%. In both cases the rates are fixed mortgage rates.