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.

Understanding Mortgage Rate Movements

Whether you’re a first time home buyer or looking to take advantage of the different refinancing programs being offered today, mortgage rates are the single most important factor in determining a home purchase. Mortgage rates continue to hover over the 5 percent mark and have us wondering what are the factors affecting housing rates. With the housing market flushed with bargain properties these times could provide the best opportunity for buying a new home.

Below is the list of three simple factors which directly affect rate movements.

Housing Market

This is the single most active factor that affects mortgage rates. The housing market of today is marked by numerous foreclosures which have helped drive home prices down and spur growing numbers of bargain properties. With numerous government programs aimed at spiking renewed interest in new home buying and directed to stop foreclosures, analyst remain upbeat about the future of real estate.

A simple understanding of what factors drive interest rates could go a long way in determining the best time of buying a new home. The rule of supply and demand states that when supply outpaces its demands, the price of a commodity drops down. Recent economic difficulties like growing foreclosures have seen an increase of available homes in the market. Making selling a home more difficult and leaving real estate companies with huge inventories of unsold and overpriced homes.

Real estate companies and mortgage services have offered lowered housing rates to address this concern. This together with bargain properties brought about by the increasing numbers of foreclosures has helped bring mortgage rates down.


Positive news regarding the surge of new home sales and an improving economy has seen mortgage rates stable at 5 percent figures. April saw record lows for mortgage with figures posted at high 4 percent levels. Gradually improving home market reports may result in future mortgage rate spikes.

The Secondary Market

Mortgage loan and services are usually channeled through banks. What homeowners don’t see is that their mortgages are passed to larger mortgage services like Fannie Mae or Freddie Mac. Mortgage Bank Securities invest heavily in the home market and increase or decrease rates accordingly. With the onset of massive losses brought about by foreclosures and declining home values which have produced a great number of bargain properties Mortgage Bank Securities have lowered mortgage rates. Mortgage Bank Securities are also listed in the market and adjust their mortgage rates to increase investor interest or protect themselves from risks.


With help from the federal government, Mortgage Bank Securities have been able to stabilize their portfolios of bad loans. Government efforts to stop foreclosure have assisted Mortgage Bank Securities recover and offer better mortgage rates.

Investor Market

Mortgage Bank Securities compete with other traditional stocks for investment. Mortgage Bank Securities historically have offered investors a good return for their investments. During the housing boom, real estate companies relied heavily on private and banking investments to fuel constructions.

When other stock options in the NASDAQ or DOW Jones they create competition for Mortgage Bank Securities and Real Estate companies. Investors may take up other stocks such as commodities (oil or gold) as an alternative to these stocks.


Mortgage Bank Securities are finding stiff competition from other stock options. With the economy finally picking up investors are shifting from risky MBS and cashing in on recent gains from Wall Street. This has forced some Mortgage Bank Securities to inch up mortgage rates to lure investors back.