After a period of sustained mortgage rates that dropped to historic lows, you might be asking yourself about the current state of rising mortgage rates and what you can do about them.
Some factors are simply out of the consumer’s control when it comes to fluctuations of interest rates. But there are some other aspects totally within your power to change and benefit from.
Let’s take a look at what is out of your control and things that you can control when it comes to interest rates.
Things Out Of Your Control
First, it’s important to understand that uncontrollable factors will influence rates. The state of the economy, for example, can drive interest ways in any which way. Generally, unfavorable conditions within the economy will help drive interest rates down. Lower interest rates, after all, have a way to encourage and sustain consumer spending to keep the economy humming along. On the other hand, when things are going swimmingly well, there might be a need to increase interest rates.
Another big-picture consideration is the 10-year treasury. As it increases, rates could go up. There’s an inverse relationship between the 10-year treasury and interest rates. So as the 10-year treasury decreases, then consumers may expect an uptick in interest rates.
The current status of the real estate market can also provide clues about where interest rates are headed. A robust and fast-moving market may encourage higher rates. When things slow down? The opposite is true, and homebuyers may feel some relief when it comes to interest rates.
Inflation will also mirror interest rates. Currently, as consumers face historic inflation, higher rates come with the territory. If inflation settles and simmers down, then there’s a chance that interest rates will follow suit.
Things Within Your Control
Inflation, the 10-year treasury and other big-picture economic variables are out of your control.
People who are saving to buy a home, however, will have a bigger say in the interest rate. Larger savings might mean that homebuyers will have the needed resources to handle down payment requirements. With more money down, many consumers can expect a lower interest rate, which can help them save even more over the long term and as they pay off their mortgage loan.
Your credit score is another variable firmly within your grasp. As you work toward improvement, you can expect the benefits of a good credit standing, including lower interest rates.
Since mortgage loan programs come in various sizes, consumers can sway their financial burden depending on the loan’s duration. A shorter-term loan, for example, may yield a lower rate for increased savings when compared to a longer-term loan agreement.
A fixed-rate loan will keep payments consistent, while an adjustable-rate loan will vary. This option is also within the homebuyer’s control. The course you take will depend on your needs and goals and will impact the costs of financing a home.
If you have any questions or are ready to get started on your home loan, contact us today!
