If you want to get the best refinancing deal, the best way to ensure should be get the lowest interest rate for your mortgage. But When will interest rates be lowest? Here are my 2011 mortgage rate predictions:

Predicting mortgage interest rates can be tricky. In fact, there are many factors which affect current mortgage interest rates. Broadly speaking supply and demand are the main factors at work. When demand for mortgages is high lenders can charge higher interest rates, increasing their profits. When demand is low reduced mortgage rates can be used to attract new buyers.

It is not this simple though, as interest rates also need to be high enough to attract investors to buy into the mortgage based securities that fund these loans. At the same time, it must be emphasized that mortgage companies have their own ways with which to set individual rates. However, they tend to stick to similar sets of factors when considering their rates, which you can also use to predict where said rates are headed.

In addition to attracting investment to fund mortgage based securities, high interest rates also discourage marginal borrowers, reducing the amount of applications and perceived demand, which when too high damages the effective functioning of the mortgage markets. The current mortgage rate will reflect the balance between all these factors, and change as the different needs of those involved take priority in turn.

2011 Mortgage Interest Rates PredictionsWith the factors above in mind, here are my 2011 mortgage interest rate predictions.

I think that homeowners who wait to refinance for too long will be in for a shock that interest rates have increased. I think that around April 2011, mortgage rates will jump up to around 6.15%. this sounds minimal, only 1% or so, but in reality, that 1% is the difference for many people between saving a lot of money, and not benefiting at all from a refinance.

I think that the rates will rise because they can not get lower, and the housing market will improve in the coming months. With the housing market improving, the entire economy will benefit. With that, money will be flowing again, and rates will rise accordingly. Besides, by April of 2011, many homeowners who were in the worst shape will have gotten relief from Government provided programs designed to aid homeowners at risk of losing their home.

I predict that mortgage interest rates will rise sooner or later. If you are not risking your home or finances, take action now.

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