5 1 arm mortgage rate

The mortgage rates forecast must take into account the fall-out from the subprime crisis - now poorly named, because the red color has changed from the high-risk sub-prime sector, even the main responsibility for mortgages with Freddie Mac and Fannie Mae.

There are several ways in which the subprime crisis mortgage rates predictions.

1. Any mortgage rates forecast increases due to increasing risk

If house prices fall as a result of foreclosure proceedings, it is of mortgages are usually more risky. Even a deposit of 20% was not enough to prevent some owners of their mortgages in default and will not be able to sell for a high enough price for the loans. Mortgages as a "prime" are now as losses on the books of some banks. The investor's response to an increased risk is always at a higher rate of return - in this case, a higher return means a higher interest rate on mortgages. Interest rate forecasts for higher must interest as a result of the mass in the residential real estate markets across the country.

2. Any mortgage rates forecast increases due to falling supply and rising demand

Mortgage interest rates, like all interest rates, depending on the general interest in the economy - the rate at which banks and other financial institutions can bond. This is usually compared with the 90-day bank rate of interest. Generally, lenders only 10% of the funds they lend as mortgages in deposits - the rest is borrowed. This is the reason why too many defaults on mortgages, a bank in big trouble - they can no longer afford to pay their own debts then!

The subprime crisis significantly reduced the willingness of other organizations with money to lend it to the banks for the purposes of mortgages. This means that the provision of loans has been reduced considerably. A low supply and steady demand, prices will always rise, and in this case, the price of money is the interest rate.

The credit crunch makes the pressure on mortgage rates forecast, and all interest in general.

3 Our forecast rising mortgage rates Due to the declining U.S. Dollar

As a result of the subprime crisis, the spread of the ant-prime mortgage market, the entire U.S. financial system from the rest of the world as unstable. This leads to a flight of mobile capital from the U.S.. The only way to attract this capital remains in the U.S., and thus halt the slide in the U.S. Dollar, the payment of a higher return, which means that with a higher general interest rate in the U.S., including for mortgages.

The government bail-out of Freddie Mac and Fannie Mae, which are necessary to stabilize the property market in the U.S., further undermine the confidence of the international money managers in the U.S. economy and further pressure on the U.S. Dollar .

Until the U.S. dollar stabilizes, there is significant upward pressure on any mortgage rate forecast, and interest rates in general.

While some still argue about the causes of the subprime crisis, there is no doubt that its effects are significant and far reaching. The instability of the real estate prices, the credit crisis and the loss of confidence in the greenback will take several years to get back to what was earlier than normal - and it is a very real possibility that we will never see the U.S. U.S. dollars as strong on the international stage again.

For this period, possibly up to a decade in length, the mortgage interest rate forecast is only in one direction - upwards. If you can correct your mortgage for 30 years now, since you can not see mortgage interest rates this low again for decades.

Mortgage interest rates forecast

Today's mortgage rates

Homeowner in the United States must take stock at this time, and ensure that they are well positioned to survive a prolonged period of higher interest rates. Fixing interest rates on these mortgages historically low prices for a 30-year period may be the best financial decision a home owner might.

Mark Bennett is a staff writer for Money Talks, and contributes regularly to other financial websites. This article is part of his series on refinancing, based on EmergencyRefinancing.com