Are Mortgage Rates Going Up? – 3 FAQs

For anyone considering buying a home, investing in residential properties, or refinancing their home, a natural thing to wonder about is whether mortgage rates are actually going up or down. After all, by getting a lock on where rates are headed, you are in a better position to make a decision in terms of the timing of your loan.

The interest rate for which you ultimately qualify for your home loan is a big deal, indeed. Paying just a few extra points can mean thousands of dollars in additional payments. In fact, you could make the argument that shopping around for a mortgage loan with the lowest-possible rate is one of the best uses of your time in terms of being frugal with your money.

If you are wondering, “Are mortgage rates going up?”, here are the answers to 3 frequently-asked-questions about mortgage rates:

1. What causes mortgage rates to increase?

A: Interest rates for fixed mortgages are affected by different factors than are those for variable-rate mortgages.

Fixed-rate mortgage interest rates are determined by fluctuations in Treasury note yields, since these mortgages are seen as the second-safest investment next to these T-notes. Meanwhile, variable rate-mortgage interest rates are determined by something called the federal funds rate – which has to do with the amount that banks charge when lending each other money.

2. How can I predict future mortgage rate changes?

A: Since nobody can precisely predict changes to T-note yields or the federal funds rate, it is not possible to accurately predict near-future changes to mortgage rates. Still, you can get a sense for where they are now by looking at historical rate trends. Try looking at one-month, three-month and annual trend charts for the type of home loan you are seeking.

3. When is the best time to take out a mortgage?

A: There are a number of factors to consider when determining when is the best time to take out a mortgage. These include: the cost of your current mortgage or rent payments, how interest rates are “trending” in terms of historical rates, your ability to come up with a down payment, and your ability to make payments on your would-be new mortgage loan.

Consider these 3 answers to frequently-asked-questions about whether mortgage rates are going up.