The following is a guest post.
This year has been a record-setter for mortgage rates. After experiencing the lowest rates in half a century, many potential homeowners are asking if now is still the time to buy. The market hit bottom with a 3.49 interest rate on a 30-year fixed rate mortgage in late July before seeing a slight recovery in the following month.
But there’s a story to be told behind that number, and it is an account that may give some insight into how mortgages will perform for the next several months. What should you expect from North American mortgage rates for the remainder of the year? You could consult mortgage brokers in Canada — or you could just keep reading to find out.
To figure out where mortgage rates will go, it helps to put into perspective the driving factors behind their recent activity. There is no one factor that can be cited to explain low rates, but among several possible influences, there are the rates for ten-year treasury bonds, which are generally seen as indicators of how well the economy is doing. When ten-year treasury bonds rise, as they have in the past months, mortgage rates also have a tendency to rise. However, those rates have recently taken a downward turn at the beginning of September, with mortgage rates expected to follow suit.
Perhaps more telling than ten-year treasury bonds is intervention from the U.S. Federal Reserve. In past months, the mere mentioning of the possibility that the Fed might act to ease mortgage rates with a stimulus has inspired movement in the market. As the market awaits the minutes from the Fed meeting to take place during the second week of September, speculation will continue.
These small signs, while noteworthy, are far from major indicators of which way the market will go this autumn. In addition to keeping an eye on mortgage rates, it is also a good idea for buyers to keep an eye on their own financial portfolio. This is because there are key steps that any consumer can take to find lower mortgage rates regardless of the market.
Among these steps, by far the most important one is to work continually to improve your credit score. This is one of the largest factors that lenders will consider when deciding whether you are a low-risk borrower. And in order to cut the amount of interest you’ll have to pay in total on a home, it is also a good idea to save the equivalent of 10 to 20 percent of your housing budget to make a down payment. This will get you a better interest rate and reduce the amount of payments you have to make on that interest.
While you’re following the mortgage news this fall, remember to use online resources like Rate Supermarket to make sure you’re on the road to financial success.