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Want To Calculate Mortgage Rates? 3 Tips For Comparing Today’s Rate To Historical Trends

Want To Calculate Mortgage Rates? 3 Tips For Comparing Today’s Rate To Historical Trends

Want To Calculate Mortgage Rates? 3 Tips For Comparing Today’s Rate To Historical Trends


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Home Page > Finance > Mortgage > Want To Calculate Mortgage Rates? 3 Tips For Comparing Today’s Rate To Historical Trends

Want To Calculate Mortgage Rates? 3 Tips For Comparing Today’s Rate To Historical Trends

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Posted: Nov 18, 2010 |Comments: 0
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For somebody who is in the market to buy a home or to refinance an existing mortgage, you know that one of the most important factors for determining when to move forward with applying for a mortgage is the mortgage interest rate.

There are two main factors that go into the rate for which you will ultimately qualify:

a. your current credit score

b. where today’s average mortgage interest rates are for your desired loan type

While it would be nice to know where rates are headed tomorrow or next year, there is no way to predict, calculate, or otherwise know what tomorrow’s rate will be. It is an impossibility to know in advance – nobody can. However, there are ways of getting a sense for where rates are today as compared to historical trends – and to understand what influences rates day-to-day.

If you want to calculate mortgage rates, here are 3 tips for comparing today’s rate to historical trends:

1. Understand what affects mortgage interest rates:

For fixed-interest mortgages, mortgage rates are affected by changes in the “yield” of Treasury securities. Treasury securities are bonds issued by the U.S. government for the purposes of paying national debt. When yields go up, so do mortgage interest rates – since the Treasury securities represent just a slightly-safer investment than do mortgages.

Meanwhile, for adjustable rate mortgages, mortgage rates are affected by the fed funds rate – which is set by the Federal Reserve and has to do with how much banks charge each other overnight loans.

2. Choose a type of mortgage whose rate you want to know more about:

Now, to get a better understanding of where rates are today, it is useful to get some context by looking at recent trends. Start by choosing a type of mortgage loan, such as a 30-year fixed (the most common type).

3. Look at 3-month, 1-year and 3-year trends:

Next, for the loan type you choose to research, look at 3-month, 1-year and 3-year trends. By doing so, you will get a sense for how these rates fluctuate over time and whether they are relatively high or low today as compared to those historical rates

Take these 3 tips into account as you get a better handle on mortgage rates in order to help you make a better decision about when would be a good time to move forward with your new mortgage.

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Mortgage Interest Rate Predictions, Trends, and Forecast for 2010

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