The following is a guest post from Chase Fraser, a senior at the Leeds School of Business, University of Colorado at Boulder. In this post Chase discusses the likelihood of home mortgage interest rates increasing towards the conclusion of 2015. What is your opinion on interest rates?
A Little Background Information on Home Mortgage Interest Rates
Interest rates are a key factor for getting a loan when purchasing a home. Interest rates determine the amount of your home loan. As the borrower. The terms specify you are required to pay back to the lender, over a certain amount of time periods, during the term of the loan.
Interest rates are expressed as a percentage because they are a percentage of the total amount of the loan. Usually the periods in which you make your payment are monthly and the term of your loan lasts usually anywhere from 5 to 30 years. As the borrower you want to try and get as low of an interest rate in order to get a smaller monthly payment.
There are also many options when getting your interest rate for your loan. There is the option to have a fixed rate or an adjustable rate. In a fixed rate your interest rate and payment stay the same throughout the course of the loan. With an adjustable rate, the interest and payments can adjust at certain periods during the term of the loan.
Predicting Interest Rates
Predicting whether interest rates will go up or down is far from an exact science, but it is something you as a buyer want to be aware of. The interest rate is created from the US Treasury Rate, but there are many factors to whether the interest rate will go up or down. Some key factors are the economy, inflation, employment, and spending within the United States. Even though predicting where the interest rate will go is a difficult task, many try their hand at predicting where the rates will go.
Bill Conerly, a contributor for Forbes, wrote an article about his predictions for the interest rate within 2015. In his article he predicts that the interest rate will ultimately rise by the end of the year, stating, “Still, the projections imply that global demand for credit will exceed global supply of savings, pushing interest rates up.” (Forbes) Although rising interest rates seem bad Conerly goes on to explain that there are some positives associated with the rise saying, “The key is understanding that the higher rates will be driven by stronger demand for credit, coming from a strengthening economy.” (Forbes)
From my research it seems that most analysts are predicting that the interest rates are far more likely to rise than to fall by the end of 2015. In my humble opinion I have to go with the general consensus of interest rates going up at the end of 2015 but like years past won’t be surprised if it ends up falling in the following year.
Realtor Bob Gordon Offers This Advice
For Boulder home buyers on the fence, now is a good time to consider finding your dream home. With home mortgage interest rates poised to increase, now is the moment to buy. You’ll either enjoy a lower overall payment or have greater purchasing power by acting before rates increase. Get started today, contact Bob to create a new home search!