Guides forecasting current rate of

Make predictions on mortgage rates is a bit 'difficult. Financial markets, including stock prices and interest rates on mortgages, are chaotic systems. This does not mean that they are chaotic in the use of the term, something that does not end at all, but are chaotic in the mathematical sense, since the formulas that describe how the mortgage rates are determined, which are the formulas used to make predictions, mortgage rates , are self-referentialcomponents.

Make predictions on mortgage rates is like the weather forecast - it is impossible to be completely accurate predictions guide interest rates soon and try to predict interest rates on loans, the greater the margin of error of prediction.

Moreover, chaotic systems are predictable in general terms.

If you think that the time may not be able to predict the maximum temperature for a given dayAugust, but we are reasonably sure it will be in a certain range - say, if you live in Orlando, between 80 and 95 degrees F, and if you live in Copenhagen, between 16 and 25 degrees C.

As time is an indicator of the general level of higher summer temperatures, the economic climate provides a broad indicator of mortgage rates.

Factors that drive mortgage interest rates: inflation

The so-called real interest rates, interest rates move in response to demand and supplyFinancial markets are independent of inflation. To get the "real interest rate" to "nominal interest rate, which is what your bank will charge on your mortgage, you simply add to the annual rate of inflation.

Factors that drive mortgage interest rates: the lower availability of credit

Functioning of financial markets on the demand and supply. If there is a limited amount of something, then you go to those who are willing or able to pay morepurpose. The same goes for the mortgage funds. Mortgage rates predictions will take into account if the money supply increases or decreases, and trends in the demand for money.

Factors that make forecasting mortgage rates on the rise: increased risk

In addition to the real interest rate determined by the underlying growth of the economy, inflation, and the supply of money available for mortgages, another factor comes into play in anyinvestment decision - risk. Mortgage rates generally depend on the overall risk relating to the property market.

If the value of the collapse of housing, as was done in some regions of the United States, so the default risk of banks suddenly increases, which means they want to pay the mortgage interest rate forecasts to take this upward pressure account.

The factors that make forecasting mortgage rates fall: government intervention

The Government of the United States is a800-lbs gorilla in the financial markets. Through the issuance of Treasury bonds at different interest rates, the government can influence the world market of money and thus affects the rate of "real interest.

Mortgage rates predictions based on purely economic considerations might indicate that mortgage interest rates because of the increase, but while the political pressure is strong, and in an election year, the government will do everything in their power, however economically irresponsible inlong term to stimulate the increase in interest rates after the November elections. Mortgage rates predictions must take this political distortion of financial markets in the account.

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