How to Predict 30-Year Fixed Mortgage Rates
Thirty-year mortgage rates are determined by a variety of factors. Being aware of the market and keeping track of trends can help predict future changes in the rates.
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Things You'll Need
- Credit report
- Historical mortgage rate data
- Current financial market information
- Lender rates
Instructions
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Higher credit scores yield more attractive mortgage rates for borrowers. Know your credit score. Banks use a credit score to analyze lending risk. A potential borrower with a high credit score is considered a safe investment and therefore may get a lower fixed interest rate than a borrower with less than ideal credit, who is considered less dependable for payment.
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Do your homework. Research state-specific history of the 30-year fixed mortgage rate. An increase or drop in the rate typically happens by small increments, making it possible to identify specific trend lines.
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Less action in the stock market can mean increased investing in mortgage-backed securities and lower interest rates. Watch the stock market. A decline in activity can mean more investments are going into bonds or mortgage backed securities (MBSs). According to MSN Money, when investors buy MBSs, the value of the securities increases, "And when bond prices rise, yields fall. Mortgage rates follow yields downward."
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Shop lenders. Most banks lend fixed mortgage amounts based on their own prime rate, which typically reflects the federal funds rate set by the Federal Reserve. Thirty-year mortgage rates are less volatile than other types of loans because they are set over a long period of time. However, major lenders' fixed mortgage rates may still vary based on internal guidelines and factors such as an individual's credit score.
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Tips & Warnings
30 year fixed mortgage rates are often higher than adjustable rate mortgages because they break up the mortgage into equal and set amounts over 30 years and do not change based on market conditions.
After the downturn in the economy, mortgage backed securities were seen as a safe investment because they are backed by the U.S. Treasury. This caused mortgage rates to be at record lows with slow increases predicted.
Typically a credit score of 680 or lower will cause a borrower to pay higher interest rates on a mortgage
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