Mortgage Rate Trends

When thinking about purchasing or refinancing a home it's important to research past, present, and future expectations for mortgage rate trends. Before you sign a home loan contract you should be certain that your loan's interest rate is in line with current trends. It's also important to time home purchases and refinances to capitalize on trends that are in your favor as a consumer.

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Many people who purchased their first homes during the 1990s and early 2000s aren't aware of the wildly fluctuating interest rates that impacted the real estate market during the 1970s and 1980s. During those decades, mortgage rates skyrocketed to 20 percent and more.

During the 1990s interest rates declined sharply, making home ownership affordable for more people. From the early 1990s through 2007 the U.S. home loan market was relatively stable, with rates hitting all time lows around six percent and not fluctuating more than a few points higher than that for an extended period of time.

In mid-2007 foreclosure rates hit an all-time high as billions of dollars worth of subprime mortgages went into default. Many major lenders shut down, and those that survived are certainly not operating at the same stable status they once held. The impact of the mortgage meltdown of 2007 will be felt in the mortgage industry and in financial markets around the world for decades to come. It is likely to have an enormous impact on interest rates, government regulation of the home loan industry, and the process of applying and qualifying for mortgages.

One of the primary reasons that people seek to refinance their home loans is to capitalize on decreased interest rates during times of low interest rate trends. If you are waiting for an opportunity to secure the lowest possible rate on a refinance it is very important to pay attention to economic conditions impacting interest rates as well as keeping your eye on daily interest rate fluctuations.

In some cases, decreasing mortgage rates aren't the only reason for choosing a home loan refinance. For example, individuals with adjustable rate mortgage (ARM) loans often seek fixed rate refinance options when mortgage rate trends indicate that rates will be up when it is time for the interest rate to adjust. Homeowners with ARM loans that adjust when rates are high can find themselves stuck with steeply increasing monthly payments that they may be unable to afford.

People who are considering purchasing a home typically watch trends in interest rates very closely in the hopes of being able to time their purchase decision to coincide with the lowest possible rate.

Home buyers looking for the best possible interest rate are well served by selecting a trusted mortgage lender early in the process of shopping for a home. Reputable lenders concerned with looking out for the best interests of clients will keep their customers updated on interest rates. Many are able to allow pre-approved buyers to lock in an interest rate for a certain period of time while still investigating their real estate options.

Regardless of whether you are interested in refinancing or purchasing real estate, it's in your best interest to pay attention to recent and historical patterns related to the cost of financing a home.

A few resources for learning about historical trends and projections for the future are detailed below:

• Mortgage X - See an number of graphs detailing short and long term mortgage trends. The wide range of available graphs starts with current rate trends and goes back a full thirty years.

• Yahoo Real Estate - View graphs showing trends over the past six months for 15 and 30 year fixed rate mortgages and one and five year adjustable rate mortgage loans.

Many different factors impact home loan interest rates. People who weren't affected by the volatile real estate market in the early 1970s and 1980s often underestimate the impact that interest rate fluctuations can have on their real estate buying power.

As the mortgage industry goes into a period of uncertainty following the mortgage meltdown of 2007, keeping up to date with trends in the home loan market will become increasingly important. Consumers must be diligent in their efforts to stay on top of the factors that impact the real cost of financing real estate transactions. It’s always advisable for consumers to consult with reputable information sources and trusted professionals when making decisions about home loans.

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