Chicago Mortgage Rates - Outlook for Remainder of 2015
In a volatile market, interest rates can change multiple times a day. Analyzing daily mortgage rates is based on live mortgage-backed securities (MBS) pricing, which is a mortgage market data service used by mortgage lenders and real estate agents. MBS prices are related to mortgage rates; when bond prices increase, interest rates decrease. As a rule, a 50 basis point change in MBS pricing leads to a 0.125% change in interest rates. Over the course of several weeks or months, these daily rate fluctuations can add up to significant changes. Varying factors can result in an increase or decrease in rates such as how well the economy is doing, employment and the housing market.
Expert predictions that 30-year mortgage rates would climb to at least 5 percent in 2015 have not materialized and homebuyers are taking advantage of current low rates. Despite the fact that rates have not risen as expected, homebuyers should always remember that rates may increase at any time. Even a hike of 0.5% on a loan can raise mortgage payments by a significant amount (in particular with a high loan amount). If rates are rising, homebuyers are encouraged to “lock” their rate to ensure that the interest rate is set until the closing on the property.
As the U.S. economy continues to improve and unemployment declines, rates may gradually increase, leading many to believe that mortgage rates can only go up in the second half of 2015. However, the economies of China, Japan and Russia have been flat and the Eurozone has not showed any sign of growth. This type of uncertainty may drive investments towards the U.S., thus benefitting the MBS market and lowering interest rates. Additionally, in January of this year, the Federal Housing Administration implemented new annual premium rates. With borrowers eligible for reduced annual mortgage insurance premiums, mortgage rates will fall, giving consumers access to lower rates.
The bottom line is that as there is no actual way to predict whether interest rates will go up or down. If homebuyers or homeowners wish to purchase or refinance at a low rates, they should take advantage of them now.
When you are ready to get started, visit www.preapprovaltoday.com to help you decide how much you can afford. Your social security number is not required and in a few easy steps, you can get a free, no obligation mortgage rate quote. Otherwise, you can call us at 708-531-8388 to speak with one of our loan officers.