Mortgage Rate Forecast For October 2008
The last mortgage rate surveys from the Mortgage Bankers Association and Freddie Mac’s Primary Mortgage Markey Survey showed fixed mortgage rates increasing over a quarter of a percent. Factors that will play a major role in determining what mortgage rates will do throughout the month of October includes Congress’s passing of a mortgage bailout bill, the Federal Reserves decision on interest rates and consumer confidence in home values.
Congress is hard at work in Washington drafting a mortgage bailout bill they hope will be passed before October. The main objective of the mortgage bailout is to give lenders the ability to free up capital and once again have the capabilities to lend money to homebuyers. Even if the bailout is passed mortgage lenders will still have strict credit standards but will likely be encouraged to lower interest rates to help stabilize the housing market.
Although the Federal Reserve is not scheduled to make a decision on interest rates until the end of October it is already predicted that rates will be lowered by 0.25 percent. The interest rate cut by the Feds is not directly tied into mortgage rates; however the decision will allow lenders to borrow money from each other at a lower or higher rate, depending on the Feds decision.
Home values throughout the country have been depreciating for about three years now and have continued to keep qualified home buyers on the sidelines. With the efforts in Congress homebuyers may once again be able to purchase homes with affordable payments which may help home values and home sales stabilize. The forecast for mortgage rates is that we will see lower rates at the end of the month then what we currently see right now.
The 30 year fixed mortgage rate, according to Freddie Mac, starts the month of October out at 6.09 percent after a 0.31 percent from a week before. There may be a slight increase in the 30 year rate if Congress does not pass a bailout bill before Freddie releases its next survey. However, the 30 year rate will once again decline under 6 percent and should average close to 5.90 percent throughout the month of October.
The 15 year fixed mortgage rate will be starting the month of October out at 5.77 percent, up 0.41 percent from the week before. Again, the same rules as the 30 year fixed mortgage rate apply. The average rate for the 15 year fixed rate throughout the month of October should average close to 5.55 percent.
The one year and five year adjustable mortgage rates will also be coming down throughout the month. The one year should average around 5.05 percent and the 5 year adjustable mortgage rate should average close to 5.75 percent.
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Submitted by admin on 9/27/08 |