when are home loan intrest rates going to drop to 4%?

Question

I know they are in the 6% range now. Are they expected to drop down to the 4-5 range anytime in the next couple years?

Answer 1

Get a fix rate now. I know a lot of people will say that i am out of my tree but I am betting that interest rate will be over 10%in two to three years from now. And yes i do a a real bet on this.

The foreclose rate is getting to high and the bank will need to tighten there lending and recoup there losses.

Answer 2

It will be a long time. We have enter a time of democrats now and will probably be that way for a while. You should expect interest rates to continue to rise to about 11% - 13% within the next few years.

Answer 3

Im a mortgage broker and I honestly Highly doubt they will get that low if your looking for a fixed rate. I think maybe in the 5.3% range is as low as its going to get. I really wish the intrest rates would go that low because that would mean alot of business!! lol but if your looking for an adjustable rate u can get as low as 1% on an option arm program but between you and me thats not the best program to get into! hope this helps!!!

Answer 4

It depends on the following, but I do not for see the rates going down to 4 percent.

Events which may facilitate the increase/decrease of the interest rates in the future:
1. Economy slowdown or growth increase (both in US as well as in China)
2. Energy Prices Trends (higher oil prices will tend to slowdown US economy and will increase the threat of inflation)
3. Housing Price Trends (higher housing prices will make the FED to act more decisively on rate increases)
4. Major Catastrophic or Terrorist Event (in case of such an event, the FED is likely to ease and to reduce the interest rates)
5. Stock Market Crash (in case of a stock market crash, the FED will me giving money away to anyone who will want it, and will likely to lower rates
6. US Budget Deficits (higher deficits will bring up the interest rates, since the Government will be competing with the households for money)
7. Chinese as well as other Asian Countries policy of investing of US Dollars in US Treasuries (This can be big and can spell potential trouble - Once Chinese stop taking US IOUs, the rates are bound to go up)
8. US Dollar Price Trend (Higher US dollar means more money flowing into the US- meaning lower interest rates)

Additional Info



Federal Funds Rate



This is the rate that banks charge each other on overnight loans made among them. These loans are generally made so that bank can cover their daily cash flow and reserve requirements. As the rate rises, banks have an increased incentive to keep more of their own cash on hand - making less money available to lend out to households and businesses.



The Federal Reserve Open Market Committee sets this rate based on the economic conditions in the country and the threat of inflation.



The future Federal Fund Rate gives an idea about what the market participants expect the Fed to do regarding the interest rates.



Eurodollar Rate


Eurodollars are the U.S. dollars on deposit in commercial banks outside of the United States. The Eurodollar market has grown tremendously over the past 3 decades as the dollar has become a world currency. Eurodollar deposits play a major role in the international capital markets. The Interbank market for immediate (spot) and forward delivery of offshore dollars is deep and liquid, giving banks the ability to fund dollar loans to foreign importers without incurring currency exchange risks. Eurodollar deposits are direct obligations of the commercial banks accepting the deposits.


Eurodollar rate reflects the London Interbank Offered Rate (LIBOR) for a three-month, $1 million offshore deposit.



Libor Futures



One-month LIBOR (London Interbank Offered Rate) rate is a reference for dealing in Eurodollar time deposits between commercial banks in the London Interbank Market. LIBOR often is the benchmark rate for commercial loans, mortgages, and floating rate debt issues. LIBOR rate is similar to the Eurodollar rate, but represents one-month LIBOR on a $3 million deposit

Mortgage Rate News
Mortgage Interest rates have been very steady over the last three months with weekly averages varying only about one-eighth of a percent over the period.

Analysis
Consumer confidence is up, the stock market is near all-time highs, fuel prices aren't too bad, interest rates are stable, economic growth is neither too fast or too slow, unemployment is low, inflation appears to be in check (growing at 2.2%), existing home sales seem to have stabilized, personal income is growing, and all seems right with the world.

That's almost scary.

Let's look deeper.

Consumer spending is up, too, even on durable goods. Durable goods are items expected to last more than a year, like automobiles, washing machines and appliances. In manufacturing, new orders are up for everything but new equipment. Forty percent of employers expect to add employees to their payroll.


The only weak point in the economy appears to be housing.

Because of low interest rates, growth in home sales fueled home equity growth -- and borrowing. That helped pull the economy through some slower times, which is why prices inflated so rapidly. Now that the rest of the economy is doing better, housing is having to pay back some of those artificial gains. As a result though, some companies like furniture manufacturers that depend on housing sales will see declining sales compared to last year and the year before.

If it weren't for the slower housing market, interest rates would probably still be on the rise. Why? Because the rest of the economy is doing well and that would normally lead investors to think there might be increasing inflation. Higher inflation leads to higher long-term interest rates.

Interest Rate Future
As long as inventory levels in housing remain high, interest rates on fixed-rate mortgages will probably remain fairly stable.

Answer 5

Never. You missed that boat.