Will Mortgage Rates Fall?

Will mortgage rates fall? There is a growing trend in the real estate market that shows a potential for mortgage rates to decline in the upcoming year.

The value of residential real estate has fallen in the past three years as a result of the subprime mortgage crisis. The real estate market has suffered a tremendous loss because of the worldwide credit crunch, recession, unemployment and foreclosures. Economists are reviewing and keeping a close watch on real estate data for signs that the housing market is improving. Real estate sales are usually slow in the winter months, so real estate analysts are waiting for the spring to determine the health of the real estate industry.

When to Purchase a Home?

Although home mortgage rates are at a record low, home buyers are reluctant to buy, because they believe interest rates will continue to fall. Home buyers will remain very cautious during the traditional home buying season in the spring and summer. They will take a “wait and see approach”, because there is a widespread assumption that the government will help to get the mortgage rate down to 4.5% or even as low as 4%. There is no conclusive evidence that mortgage rates will fall that low.

Factors to Watch

The two factors that play the most important role in lowering market rates is treasury bonds and the state of the United States economy. Interest rates fluctuate because of the recession and the federal deficit. A economy facing a recession gives the government incentives to lower mortgage rates.

Taking Advantage of Low Mortgage Rates

Homeowners, who would like to refinance and take advantage of low rates, don’t qualify because they have negative equity. This means they owe more on the mortgage than the house is worth. New home buyers will have a tougher time qualifying, because the mortgage companies have tightened their belts, after lowering their lending standards during the housing boom.

Will Mortgage Rates Fall?

In the face of a deteriorating economy, the government has provided initiatives to help the economy by reducing Fannie May and Freddie Mac financing costs. This will enable these financial mortgage giants to pass the savings to home buyers in the form of lower mortgage rates. Mortgage rates have begun a downward trend -where you will see some fluctuations- but mortgage rates are more likely to remain low in the upcoming year.

Related posts:

1. How Are Home Mortgage Rates Determined?
2. What Drives Mortgage Rates?
3. Why Older People May Need An Adverse Bad Credit Loan Mortgage?
4. What Is a Fixed Home Mortgage?
5. What Are Good Rates for Bad Credit Mortgages?