Mortgage Rates Predictions - Will Mortgage Rates Rise?

Current mortgage rates predictions for the USA are that mortgage interest rates will remain at historically low levels until after the Federal election in November, and then begin to rise sharply. Several economic factors are putting upward pressure on mortgage interest rates predictions.

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Home owners in the US may not feel that mortgage interest rates are at historically low levels, because there has been a slow upward creep in interest rates over the past two years, and current mortgage interest rates are higher than they have been since early this century.

However, this view is only viable for those with short memories - and the very young. Not since the 1960s has there been such a sustained period of low mortgage interest rates.

Locking in the current low interest rates for 30 years by refinancing your mortgage may be a smart move for home owners. You can use an online calculator to work out whether refinancing will lower your monthly mortgage payment.

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Mortgage interest rates predictions are on the rise, because of a number of important economic pressures.

1. Mortgage Rates Predictions Rise Due To Rising Inflation

The rate of inflation is calculated into the interest rates charged for mortgages, credit cards, and other forms of lending. Rising oil prices, and the resulting rises in the price of transport, food, heating, and other necessities, will feed into a higher rate of inflation in the near future. This will put upward pressure on mortgage rates predictions.

2. Mortgage Rates Predictions Rise Due To The Falling US Dollar

As a result of the sub-prime crisis, which has now spread to the prime mortgage market due to excessive forced sales and falling property values, the entire US financial system is regarded by the rest of the world as unstable. This is resulting in a flight of capital from the US. The only way to entice capital to remain in the US, and thus halt the slide in the US dollar, is to pay a higher return, which means having a higher general interest rate within the US.

Until the US dollar stabilises, there will be significant upward pressure on mortgage interest rates predictions.

3. Mortgage Rates Predictions Rise Due To Increased Risk

Plummeting house prices as a result of forced sales makes mortgage lending in general more risky. Even a 20% deposit has not been enough to prevent some home owners from finding themselves upside down on their mortgages. Mortgages classified as "prime" are now showing up as losses on the books of some banks. The response to increased risk is always to require a higher return - in this case, a higher interest rate on mortgages. Mortgage rates predictions must be for higher interest rates as a result of the mess in the residential real estate markets across the country.

Combine these immediate pressures with a history over the past 50 years for mortgage interest rates to average much higher than the current mortgage rate of 6% to 7%, and you have the recipe for some steep increases in mortgage interest rates - but most likely not until after the Federal election. Political pressures are also something that mortgage rates predictions must take into account!