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     Mortgage interest rates predictions are on the rise, because of a number of important economic pressures.

     1. Mortgage Rates Predictions Rise Due To Rising Inflation

     The rate of inflation is calculated into the interest rates charged for mortgages, credit cards, and other forms of lending. Rising oil prices, and the resulting rises in the price of transport, food, heating, and other necessities, will feed into a higher rate of inflation in the near future. This will put upward pressure on mortgage rates predictions.

     2. Mortgage Rates Predictions Rise Due To The Falling US Dollar

     As a result of the sub-prime crisis, which has now spread to the prime mortgage market due to excessive forced sales and falling property values, the entire US financial system is regarded by the rest of the world as unstable. This is resulting in a flight of capital from the US. The only way to entice capital to remain in the US, and thus halt the slide in the US dollar, is to pay a higher return, which means having a higher general interest rate within the US.

     Until the US dollar stabilises, there will be significant upward pressure on mortgage interest rates predictions.

     3. Mortgage Rates Predictions Rise Due To Increased Risk

     Plummeting house prices as a result of forced sales makes mortgage lending in general more risky. Even a 20% deposit has not been enough to prevent some home owners from finding themselves upside down on their mortgages. Mortgages classified as “prime” are now showing up as losses on the books of some banks. The response to increased risk is always to require a higher return – in this case, a higher interest rate on mortgages. Mortgage rates predictions must be for higher interest rates as a result of the mess in the residential real estate markets across the country.

     Combine these immediate pressures with a history over the past 50 years for mortgage interest rates to average much higher than the current mortgage rate of 6% to 7%, and you have the recipe for some steep increases in mortgage interest rates – but most likely not until after the Federal election. Political pressures are also something that mortgage rates predictions must take into account!

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