Let’s face it; mortgage interest rates are hard to predict. In a perfect world, potential homebuyers would be able to see where the rates were headed, either up or down, so they could lock in on the lowest rates available in the immediate future. But a perfect world doesn`t exist and so all we can do is make educated guesses.
While there is no formula to accurately predict interest rates, certain data may better help you analyze the trends. Knowing how trends have worked in the past will give you a better prediction of how the rates will go in the future, although nothing is a surefire bet. All you can do is do your research and make well-informed decisions.
Plenty of data exists, readily at hand, which can help you analyze the interest rate trends. This includes regular statements from the Federal Reserve. Noting any Fed predictions in the media may be the easiest way of determining where interest rates may be headed. This is because the Federal Reserve has the power to change interest rates and this sole entity controls economic growth and employment more than any other in the nation.
Keep an eye on the Federal Open Market Committee (FOMC), which releases statements throughout the year. FOMC has stated that interest rates should remain at or near zero percent through 2013, which is good news for potential homebuyers. The FOMC staff prepares regular reports detailing past and prospective financial and economic developments and aside from interest rates, the detailed data includes things like foreign exchange markets, employment, consumer spending, business investments, wage and price trends and construction. Think of these reports as literal breakdowns of the economic climate. Much of this you may hear in the news, but going to the source will get you the best and most accurate information.
Other data sources that can be used to analyze interest rate trends are brokers` price sheets, lender`s rates surveys, rate charts that show trends over a period of time and U.S. Treasury rates. For example, a 2011 chart shows that 30-year fixed rates were in steady decline from the end of July (which showed a 4.55 rate) to October (at 3.94). It`s smart to assume they will continue to decline or at least stay around the same rate through November. Looking several months back, however, the rates did jump slightly around the beginning of February (which reached over 5.00). Despite this and even considering a potential surge during November, rates should stay around 3.80 and 4.02.
Borrowers wanting an affordable fixed rate mortgage should take advantage of this type of information so they can lock in that interest rate. Although fixed-rate borrowers will give up any potential lower interest rate and monthly payment, they are guaranteed the security of their set rate, which is something adjustable-rate borrowers don`t have. Locking in your fixed rate means you never have to worry about your interest being higher than it was at the start of your loan term.
Factor in the costs associated with interest by using a mortgage cost calculator. No matter the interest rate, you can reduce the amount you have to pay back by saving up at least 10% of the purchase price to put toward a down payment on the home. For further information visit http://www.simplyfinance.co.uk/.
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