mortgage marketing

As the world enters the fifth year since the 2008 Wall Street meltdown, there are still many questions regarding mortgage rates and the financial future of the U.S. One question can be answered with confidence: mortgage interest rates are not going down in 2013. Here are the Top 4 Factors Affecting Mortgage Rates in 2013





1. The Fed & Treasury Department Have Been Keeping Mortgage Rates Artificially Low.

The last four years found the Federal Reserve and Treasury Department working together to keep interest rates artificially below standard. As the recovery process continues, housing starts and existing home sales have increased steadily; a sign of a strengthening economy. The policy makers in Washington D.C. see the trends and are poised to let interest rates climb slightly or remain steady.

2. Outside Speculation From Lenders and Borrowers

It’s this anticipated increase during 2013 which has some savvy borrowers looking for a mortgage refinance option before the Fed raises rates and those translate into higher interest rates. Most of these borrowers are looking to avoid adjustable rate mortgages for a more traditional steady rate.
The very prospect of interest rates raising during calendar year 2013 has made it easier to find mortgage leads and real estate leads. The number of buyers is increasing. With the stricter lending standards in place, these are safer investments than those peddled during the subprime bubble. These are borrowers who have strong credit and work histories, helping lenders to feel confident in lending.

3. Employment & Consumer Confidence On The Rise

Employment numbers are improving although from month to month we do see some peaks and valleys still. Increases in construction and manufacturing are helping the U.S add some jobs to the rooster and companies are starting to hire and spend. When people have money in their pocket and and hear about job growth, this gives them the consumer confidence they need. Subsequently we see people purchasing new houses, cars etc.

4. Stricter Credit & Borrower Standards

The glut of cheap credit only fuels growth bubbles, instead of solid economic returns. The Fed understands this too well following the collapse of two major bubbles built on cheap credit. They will be forced to act quickly and decisively to raise rates. Those rate hikes will occur in 2013, ending the run on cheap or free money for corporations and lenders. This will force lenders to ensure borrowers are a sound risk.
The result of the 2008 meltdown has been caution on the part of lenders. They are less likely to extend credit to those of questionable work history or credit history. They are sitting in trillions in capital instead of investing it. Until interest rates increase, the majority of those holdings will remain held. It’s cheaper to borrow from the Fed and lend, than to lend from working capital or profits.

Mortgage Rate Conclusions

Mortgage rates are rising in 2013. The Treasury has hinted at possible hikes going back to July 2012. The Fed has floated the idea of raising rates at each of the last five meetings. The response from the markets has been positive towards rate hikes. The Fed has little choice but to raise rates in 2013 or risk being unable to raise them once the markets become superheated, as during the early and mid-2000s.
The only question lingering about interest rates and mortgages is how high they will go and when. We are experiencing hikes now for lenders and borrowers based on anticipations about what the feds will do. Most experts agree at the end of the summer and into the fall will see the biggest hikes.