First Time Home Buyers


Mortgage Rates Predictions

Our mortgage rates predictions for the remainder of 2012 and beyond:

Short term trend: Stable to slight rise
Long term trend: Up

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Unfortunately, many mortgage lenders have been severely hurt by the subprime mortgage crisis. Many mortgage lenders have too many real estate loans on their books that have gone bad and are not granting any more mortgages to buyers  - no matter how good their credit.  Banking rules and regulations require certain balances in the loan portfolio of banks. Therefore, it is best to apply at a lender that isn't feeling the negative effects of the subprime crisis.

30-year mortgage rates: will rise to 5.00% by year end.

Here is our mortgage rates predictions for 2012:
Longer term trend: Up^

We are currently experiencing a tug of war between two monumental forces that effect mortgage rates. Each force is pulling in a different direction. Accurately determining which force will prevail will mean the difference between mortgage rates predictions that are right on the money, and predictions that are way off of what actually happens.

On one side you have a rapidly slowing economy putting pressure on mortgage rates to fall. There is a glut of homes for sale on the market and a shortage of buyers. This puts tremendous pressure on mortgage rates to fall.  But on the opposing side you have inflation increasing.

Rising inflation causes interest rates to go up. If I lend you $500 today for a period of one year, and inflation causes that same $500 to only purchase the present day's $450 worth of goods one year from now, my $500 is really only worth $450 when you factor in inflation. If inflation is running at 10% per year (and gasoline, energy, and food prices are rising by even more than that), I would need to be repaid at least 10% more one year from now just to break even.

The cause of inflation is central bankers printing too much money. Just as wet streets are a symptom of rain, rising prices are a symptom of inflation. Rising prices are not inflation, they are merely a symptom of the real problem: dilution of the value of money. This dilution is a result of too much money printing by central banks and governments. It's not that prices are going up, it's the value of money going down.

The higher the inflation rate, the higher the yield that lenders demand in order to loan money. Typically, lenders want a real return of at least 2%. That's 2% above whatever rate inflation is.

With the Federal Reserve printing money like crazy to bail out Wall Street investment houses, as well as printing money like crazy to cover government deficit spending, inflation will continue to increase. It is highly likely that the mortgage rates predictions of higher rates to come with each passing month will be correct.

Despite a slowing economy, higher inflation will cause lenders to demand higher rates. The days of falling interest rates are over.

Our mortgage rates predictions are for continual increases later this year and into next.


Housing Not Yet At Bottom
 Real Estate continues to lose value. One expert predicted the subprime financial crisis in 2008 and is now calling for an Economic Depression in 2011 -2012. Learn how he is helping others protect and greatly increase their wealth in spite of the financial crisis. Read more>>>

Learn to buy real estate for pennies on the dollar in today's depressed market. Click here to watch a 5 minute video for more information.


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