Mortgage rates have much to do with how the economy is doing. When mortgage rates go up, people can no longer afford to invest in new properties. This, of course , brings a slowdown in the construction sector and also means less money will flow through the economy.
On the other hand, when mortgage rates fall , more people are able to buy a house. The lowest rates fall , the greater the income needed to buy a house. When buying houses, building commercial luxuries and stimulates the economy in many ways.
Remember that interest rates ?
For 20 years , we have seen interest rates on mortgages in the double digits. Back in the late 70s and early 80s , the double-digit mortgage rates were the norm. It was not until 1985, after the Reagan administration ended the stagflation and the misery index that haunted the Carter years , that mortgage rates found buoyancy at around 7 % .
Since then , mortgage rates have fluctuated between 9% and 5.5%. Overall, it was an environment of stable interest rates for a long time we have experienced in recent years.
Higher or lower ?
Now the question is where interest rates from now . Reading tables, we will try to predict future developments, as if we were reading the commodities charts to get an idea of which direction the price of soybeans. Then we will make a prediction about another product that is sure to shock !
At this time , it is advisable to make a warning. First, no one can predict the future , and second , any world event can change the future now looks like a heartbeat. Also , you can not overlook the fact that these unforeseen world events can happen unexpectedly . With that behind us , let's take a look at the graphics.
The last 18 years
Throughout the 90s , the interest rates of fixed rate mortgages to 30 years the rates were between 9% and 7 % . When George W. Bush took office, the average 30-year mortgage was 8.75 %. From there , it facilitated downward steadily through the first George W. Bush Mandate . In fact, it reached a low of 4.75 % in late 2003 . In this case , interest rates vary between 6.5% and 5.5% for the next three years. It was an environment of exceptionally stable interest rates and that was one of the reasons that the real estate market turned red hot, and yes, overbought.
In 2006 , the trend broke above 5.5 % to 6.5 % , but the rate will rise no more . Now , interest rates are around six percent and low .
Reading from tables
The technical operator , ie , one that sells products by reading letters certainly believe interest rates , as they head down might retest the minimum of 4.75 %. It will be important to see if a double bottom is done at a rate of 4.75 %. If done the background, the interest rate will increase.
Because the underlying fundamentals of the market, as the Fed tries to lower interest rates to stimulate the housing market, interest rates seems to be much more likely to break down 4.75% after they arrive . If they do, a new downward trend will be in the way. How low interest rates might be , nobody knows. However, it certainly is not out of the question that we could see 4% fixed mortgage rate over 30 years before this downward trend ends .
4% !
Historically , 4% is a very low interest rate , but right now it really seems that it is much more likely to see a 4% to 7 % of it. So, for what it's worth , that's my prediction. Let's see what kind of interest in a fixed 30-year mortgage rate somewhere around 4 % before an inflationary aspect of the economy takes over.
Where do you think that this aspect of inflation is coming? Well, here's another prediction and you can find more amazing than the first!
The Impossible Dream
It's over for the rally in crude oil . Crude oil is oversold ! There is no reason for crude oil trading above $ 100 a barrel. As the technology boom of the 90s and the housing bubble a few years ago , it is an act that can not last forever !
It's something that nobody knows what the true market value of crude oil is today. However, it suggests that is somewhere between $ 50 and $ 60 a barrel would be logical . However, when prices fall , they tend to go through the true market value before they float toward her.
If this bubble burst in the crude oil market follows the same modus operandi market bubble burst after normal do not see why you can not see $ 35 crude oil was again , at least for a little while .
What does this mean for the price of gas ? Maybe $ 1.49 a gallon? Well , it may seem completely out of whack with what we hear reports of our new day and night, I do not think it can not happen .
Back to Reality
No doubt there will be a time when $ 100 is not too high a price for a barrel of crude oil. There will come a time when $ 3.50 is too much for a gallon of gasoline. However, the letters tell us that time is not here yet.
So , cheap gas , as John F. Kennedy , Ronald Reagan and George W. Bush tax cuts will stimulate the economy, as Bill Clinton tariff agreements , which lower the cost of living which will make more goods affordable to the public. These things , but in good health of the economy, bring some inflation and this will break the downward trend in interest rates .
I know these predictions seem quite uncomfortable and maybe they are ! However, my strategy is to believe they're coming and they do not, at least I'll be happy to believe now . Again, if they occur , we will all be happy!
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