Interest rate predictions are going to get very difficult in the near future as mortgage rates could have seen a recent bottom. It was very easy to predict interest rates while overall rates were in a downtrend, but what is going to happen now?
Interest rate predictions were very easy to figure out since October of last year. If you said interest rates were going down, you were likely to be very correct. Overall mortgage rate trends were down so why wouldn't rates follow? In the last year rates fell from over 6% to under 4.8%. The troubling issue at hand now is the fact that we have seen a bounce from under 4.8% all the way up to 5.29% in two short weeks; is this going to continue?
No one knows the answer to that but a strong predictor of that is the 10 year treasury yield. When the yield goes up, it is very likely that mortgage rates are going to follow. Since January, the yield has been in an uptrend so it is quite unusual to see rates take this long to react. The current 10 year treasury yield suggest that mortgage rates should be around 5.6%. Will overall rates really go this high? Well, it is quite likely, especially if history repeats itself.
Now that we know it is going to be very hard to predict interest rates in the near future, which direction are they likely to head. Well, unfortunately, a lot will be determined by what the government does. Many of you will probably agree that the government, especially the Federal Reserve Bank, is going to do everything to keep rates as low as possible; that is one of the only was to get us out of this current recession. Overall, the interest rate trend is down so lets see if it stays that way.
Subprime Blogger offers a series on interest rate predictions and where they are headed in the near future. There is also a great amount of information on mortgage rate trends and how you can utilize these trends.
