Mortgage Rate Forecasts For the Future

Mortgage Rate Forecasts For the Future
By Andrew Stratton

One thing that consumers are very keen on paying attention to is mortgage rates. Recent research has indicated that a consumer will begin researching rates months before they finally pull the trigger and decide on a loan. If you are looking at buying a home in the near future, or you are just someone who likes to stay on top of the trends, you should pay close attention. Below, we will go over some predictions and projections from a few expert sources.

Thirty-Year Home Loan Rates

You may recognize the name Freddie Mac from the recent financial crisis in 2008. Freddie Mac is, in short, a federally backed company that deals in the purchases and sales of mortgage securities. Since 1971, Freddie Mac has released a weekly report of lending trends. Recently, the interest rates on 30-year loans were at 4.53 percent according to this publication. This figure continued to drop significantly to an impressive 4.1 percent interest. While the current numbers look good for potential homebuyers, Freddie Mac is projecting these figures to climb back up to 5 percent as time continues to pass. It is important to note that the increase in rates is just a projection based on observable market trends. Also important to keep in mind is that the increase in mortgage rates will occur over time and not all at once.

Unrelated to Freddie Mac is the Mortgage Bankers Association, which has also made projections for the coming future similar to those made by Freddie Mac. They also predict interest rates gradually rising to a 5 percent plateau.

An esteemed economist, Dr. Bill Conerly, projects an even sharper increase in rates for the foreseeable future. His forecast has this figure topping out around the 6 percent range. But, Dr. Conerly is not overly concerned about this rise, and he doesn't believe the public should be either. He attributes this natural rise to stronger economic growth; the likes of which have not been seen since our recent economic crisis in 2008.

The Home Buying Institute, however, does not see these figures getting much higher than they already are. They claim that some of the more dire predictions are focused on the state of the Federal Reserve. As you should know, the Federal Reserve is winding down and eventually completely stopping their economic stimulus incentives. These stimulus incentives were put in place amidst a severe economic crisis in 2008, and the fact that the Reserve is finally comfortable easing out of the programs speaks volumes to Dr. Conerly's assertion that the economy is getting stronger.

Experts predicted that mortgage rates would go up as the Federal Reserve slowed down their stimulus program, but the shut down has already begun and so far these numbers have only continued to drop. Stay tuned to see where these figures will go in the future!

When looking for an expert on mortgage, Grand Rapids residents visit Community West Credit Union. Learn more about our services at http://www.communitywestcu.org.

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