Mortgage predictions are made every so often by the Mortgage Bankers Association (MBA). This is done to give an idea how the housing market is doing and, to provide insight on what is expected. Earlier, this year, a mortgage rate forecast was issued that indicated mortgage rates would be on the rise, by the end of 2011 and beginning of 2012. However, there is no definitive prediction that can be made, because a lot of factors determine the trend of mortgage rates. These include the economic movement, the 10-year Treasury bond yield, inflation, etc. Nonetheless, these predictions do help potential homeowners, or those looking to refinance, pick out favorable times to do so.
The mortgage rate forecast from earlier this year estimates that, the rates by the end of the year will be at 5.5%. This prediction was for a 30-year fixed rate mortgage. However, the current primary mortgage market records the rate for the said mortgage at 3.97%. If you take a look at a 15 year fixed-rate mortgage, it is at 3.39% whereas the mortgage rate forecast had it at 4.33%. The 5/1 year adjustable-rate mortgage is placed at 3.30% compared to predictions of 4.02%. The Federal Housing Finance Agency has 4.49% and 4.63% for a 15 year and 30 year fixed rate mortgage respectively. Mortgage Bankers Association weekly record shows 4.23% for a 30 year fixed rate mortgage, 3.54% for a 15 year fixed-rate mortgage and 3.01% for a 5/1 year adjustable-rate mortgage. All these figures imply a decrease in mortgage rates, especially if compared with previous years.
The Mortgage Bankers Association had made a mortgage rate forecast of 0.6% increase in the Federal Housing Finance Agency. This is the House Price Index, which has really not seen much of the prediction come to pass. As the year comes to a close, much of the estimate made for 2012, 5. 8% increase in rates, appear farfetched. Nevertheless, because there are still a lot of economic changes taking place, we have to wait and see how it all goes.
An increased mortgage rate forecast shift the housing market significantly. If you are looking forward to invest in property, you will have to weigh the risks of dwindling prices to the advantages of low interest rates. On the other hand, there is the option of waiting until later to get into the market at a discounted price. In this case though, the interest rates might increase, which would mean elevated costs to finance. However, because there has been a low trend pretty much throughout the year, the market seems to be stable, for the most part. Unfortunately, this has done little to minimize foreclosures, which are still prevalent. These foreclosures have resulted to the decrease in home prices. In turn, the value of homes has declined, which puts homeowners looking forward to refinance in a tight position.
According to a weekly blog posted on lenderama, it’s safe to say that when it comes to the housing market, you need to be cautious. Be sure where you invest your money. The mortgage rate forecast has not quite picked as was hoped. The market continues to be unpredictable, which goes to show the economy is still trying to regain its balance. If you are considering purchasing a house soon, do further research and look keenly into daily mortgage rates.
