How to Understand Mortgage Rates

mortgage rates trends

By kp1832000

When searching for a mortgage, mortgage loan rates are normally the deciding factor when it comes to choosing a lender or bank. Whether your interested in home mortgage refinancing, home equity loans, or initial home loans, your mortgage rates are what dictate your monthly payments. Finding the lowest fixed interest rate is the name of the game. Mortgage rates are influenced by many factors but most notably the 10 year treasury bond. Here are a few tips to help you better understand mortgage rates and why they move.

- mortgage rates trends

Instructions

1. Understand the factors that determine mortgage rates. Although there are a number of elements that effect mortgage rates, the 10 year treasury bond or Intermediate Term Bond is agreeably the biggest indicator in determining the movement of mortgage rates. The treasury bonds are 10 years In length. Being one of the closest contracts to a typical 30-year mortgage, the 10 year treasury bond makes a great comparison

- mortgage rates trends

2. Know the causes and effects of inflation. Inflation in our economy has a strong influence on mortgage rates. When economists predict inflation, mortgage rates tend to go up. But when the threat of inflation isn't there, mortgage rates tend to fall. Many people monitor mortgage rates in the hope of taking advantage of refinancing their mortgage at a lower rate.

- mortgage rates trends

3. Be aware of what's going on in the news. Good or bad overall economic news has a huge effect on mortgage lenders rates. Economic turmoil can cause mortgage lenders to lose faith in home owners and borrowers ability to repay their mortgages. If the economy is bad people start to lose their jobs and other means of income which results in more defaulted loans. Thus leading to high loan modification applicants that can also bring mortgage rates up.

- mortgage rates trends

4. Pay attention to economic data reports. Reports like the Consumer Price Index(CPI), Jobless Claims Report, Gross Domestic Product(GDP), and Home Sales reports. All of these reports measure economic data and are a great ways to predict the rise and fall of mortgage rates. The more you know about mortgage rates and what moves them the more options you will have. For instance if you think mortgage rates are going to fall over the next few years, an adjustable rate mortgage (ARM)-that gives you the current mortgage rates- might help you save money. Adjustable rate mortgages are high risk though. Having an expert knowledge of mortgage rates and trends are a must. Avoid bad credit mortgages as the rates are normally high. Sometimes renting is the better short term option.

- mortgage rates trends

Resource

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- mortgage rates trends

mortgage rates trends