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Current Home Mortgage Rates Rise Faster

Do You Expect the Mortgage Rates to Rise Quicker?

Nothing is permanent same with mortgage rates too

When pop went off the bubble of the South Sea company in the beginning of the 18th century, many an eminent persons including Sir Issac Newton saw huge loss of fortune. This was among the first cases of crashing down of the stock market. The scientist quite philosophically remarked that it was easy calculating the motion of celestial bodies but it was difficult to fathom people's madness. Since then the earth has produced better astronomers whereas market prediction ability of the people has been still the same. Keeping this in mind we should remember that the mortgage rates at present are not constant and might fluctuate any moment.

How Long can the Reduced Mortgage Rates Last?

It is not that mortgage rates can soar high any moment. But two main reasons are influencing the mortgage rates and responsible for its rapid and steep rise.

Firstly, confidence is the platform on which a market is built. At present people are confident on the sector of housing market. Thus the real estate prices are rising high and mortgage demand is increasing. This is also evident in recent research that has come up in the following articles:

Market Plus Feb'12-It has been noted by Core Logic that there has been an increase in nationwide home prices. December 2012 has seen an 8.3% increase above 2011, the highest after May 2006.

It has been noted in the same report that a rise in home sale by 6.6% took place in 2012 than the previous year.

  • Reports from Realty Trac say that filing from foreclosures in 2012 dropped by 3% from that of 2011 and a 36% from the year 2010.
  • In their latest release of house price info on 11th of Feb, the NAR reveals that there was a bigger increase during the last months of 2012 regarding median home price. This was the highest since seven years.
  • NAR's same document published index of housing affordability, indicating that in 2012 it was the most affordable to own a home in the U.S. than in any other year.

The second reason is based on simple economic concept of demand and supply though from the first it is a little more speculative and complicated.

In Seeking Alpha, an investment website Markos Kaminis stated of late that the lenders took extra care for customer satisfaction when mortgages were in great demand. But later the big banks came to their rescue. Among those standing were Morgan Stanley, Citigroup, Bank of America is still burdened by mortgage securities that underperformed. This gave them a setback and is now not much interested to take the risk of new home loans.

Established lenders and few new ones have slowed down in this respect. Nevertheless if the mortgage demands increases which seems likely to happen the scenario would be most critical. A probable situation might be Short supply countering abundant demand. This would instigate mortgage rates to go high.

Anything Might Happen but Risk Sometimes Pays

Newton paid a high price and understood that market trends cannot be anticipated by even the most brilliant minds. Most experts are speculating that the rates of home mortgage will slowly move upwards. The market survey done by Freddie Mac regarding primary mortgage implies that the process has already begun. But nobody can be sure of it as there is always a chance of the rates coming down or dropping.

If you are waiting for the right time to apply for refinancing or a home loan and you expect the rates to rise then you might go for it. Your risk might be checked with this move. So, hurry up and find the competitive quote for mortgage.

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