Monday, January 25, 2016

Mortgage Rate Expectations In 2016

No one, not psychics or clairvoyants, economists or analysts know for sure what is going to happen to mortgage rates in 2016.  After the surprising twists and turns within the housing market over the past decade and the credit crunch of 2007 into 2008 the only thing for sure is that economic forecasting is no more reliable than astrology as the late professor of economics at Harvard, John Kenneth Galbraith stated.  This does not mean however that speculation about the 2016 mortgage rates is futile.
It is unwise to go through the year without a forecast.  Some thought at what our credit market will possibly look like based on the current economic situations, historical data and trends are necessary.  It may not prove to be one hundred percent spot on but time and time again it has been proven that the more we know the better off we can prepare for the future.
It is unwise of homeowners to expect the crazy low rates that are currently “normal” to remain.  If you look into the archives of Freddie Mac you will see that it has been more than five years since the rates on a thirty year fixed rate mortgage were over five percent.  In fact, this decade has reached an all time low point.  Near the end of 2012 the rates were at three point thirty five percent.   Currently, the thirty year fixed rate mortgage rates are a little over four percent.
Consumers will look at this as a new normal when in fact this is far from normal and is in fact exceptional.  Although it is not expected that mortgage rates continue to rise at any significant levels it should not be forgotten that there was a time in our not so distant past where normal thirty year fixed rate mortgage rates were above ten percent reaching a high around eighteen point forty five percent.  This wasn’t that long ago, in fact these rates were found in October of 1981, only thirty five years ago.  This was in fact when many of us were in middle school.  Think about it; that really isn’t too long ago.  Consider what the rates will look like when your middle school aged children are middle aged; can our economy continue to grow with rates under five percent.
It is probably unlikely that any economists would bet that we will see mortgage ratesreach those all time high’s again in our lifetime but to stay at the low we are currently experiencing is unlikely over time as well.  What you will find mortgage analysts saying is that the “normal” we are experiencing at the moment are unlikely to be permanent just as the high’s of the early eighties were unlikely to become continue for years to come.
There are many variables when it comes to our economy and mortgage rates.  The timing of when mortgage rates will increase and decrease is anyone’s guess.  The inevitability of the situation however remains the same; mortgage rates will continue to increase and decrease throughout time depending on a number of variable situations within our own economy and that of the economies we rely on outside if the United States.
Continue to look for the increase in the current economy with low inflation and low unemployment to increase mortgage rates slightly.  As we continue to see peeks in incomes, spending, consumer confidence, manufacturing and the gross domestic product we can expect strong mortgage rates with increasing.  The faster the economy grows the more the mortgage rates will spike and at a greater pace.  What we look for going forward is consistent growth that paces itself in order to prevent a major spike in mortgage interest rates for 2016.
Cross Country Mortgage in Brighton, Michigan provide mortgage services for clients including new home loans, refinancing, reversed mortgages, new purchase home mortgages and home equity loans to the entire Livingston County area including Brighton, Howell and Livingston County. Cross Country Mortgage Brighton, MI at

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