Mortgage rates fluctuate due to changes in demand, increases or decreases in the Federal Reserve discount rate and shifts in the economy. Political instability, stock market changes and even general consumer sentiment can factor into mortgage rate changes. Personal factors such as your credit score, outstanding credit balances, job stability and the value of the home you want to finance can factor into your mortgage rate offers. Predicting mortgage rates requires tracking the direction of mortgage rates over time and establishing your personal mortgage rate range.
Step 1
Assess your personal mortgage rate factors. Banks rely on your credit score, financial history and income when assessing your risk before making a mortgage rate offer. Calculate how much excess income you have over your current monthly obligations and assess your outstanding financial obligations. If you have sufficient income to cover your expenses, your new mortgage and have income to spare, you may be offered lower interest rates.
Step 2
Obtain your credit scores from Experian or another credit bureau and compare your score to the average published credit score. As of May 2010, the average credit score at Experian on a range from 330 to 830 was 693. If your score is significantly higher than this total, you may be offered more attractive mortgage rates, while a lower score may result in higher interest rates for your mortgage.
Step 3
Review your mortgage loan options. You may have access to special mortgage loan rates if you are a military veteran, live in a designated rural area or are a first-time home buyer. If you qualify for a specialized loan program, your mortgage rates will generally be lower than regularly published mortgage rates.
Step 4
Track mortgage rates for several weeks. Plot the mortgage interest rates published by a bank, mortgage company or a financial website. Note the direction of the rates to help predict if mortgage rates are increasing or decreasing. Be sure to use the same source of rates to ensure consistency.
Step 5
Establish your mortgage rate prediction. Take the current mortgage rate and add or subtract points based on the direction of mortgage rates and the time before you anticipate closing or locking a rate on your mortgage loan. If you qualify for special mortgage programs, use an average mortgage rate published for these programs. Increase your mortgage rate prediction if you are less creditworthy and decrease the rate if you are a good credit risk.
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