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Stephen L. Smith, Manager

A.C.L. Mortgage Services, L.L.C.

steve@acl-mortgage.com

Will Mortgage Rates Drop Again?

By Ann White

Will Mortgage Rates Drop Again? Read below to find out if mortgage rates will drop again in the future!

While mortgage rates have been quite low for the past year, they appear to be set to rise again. While rates are set to rise, there is always the chance that they will fall again. There are several factors that could influence whether or not mortgage rates drop again.

Economy Worsens

One factor that could cause mortgage rates to drop again is if the economy worsens in the future. One reason why rates are expected to increase is that the economy is improving and the government needs to raise interest rates to prevent inflation. The increase in federal interest rates will indirectly increase mortgage rates. If the economy worsens in the future, the government will need to drop rates, which will in turn decrease the average mortgage rates.

Government Intervention

The second factor that could cause mortgage rates to drop again is if the government intervenes in the mortgage lending marketplace. In years past, the federal government invested billions of dollars in mortgage companies, including Fannie Mae and Freddie Mac. By investing in these companies, the two mortgage giants were able to keep their offerred mortgage rates down. If the government feels a need to keep rates low in the future, they could take similar action, which will then drop mortgage rates again.

Weak Demand

The third factor that could cause mortgage rates to drop again is if there is weak demand for mortgages going forward. Mortgage rates are most significantly affected by supply and demand. When there is more demand for mortgages, rates will increase. As rates increase in the future, getting a mortgage will be less attractive. Because of this, it can be expected that mortgage rates will drop again.