San Diego, CA (PRWEB) July 29, 2013
LoanLove.com is a borrower advice website that provides detailed insights into the mortgage industry in a fun and entertaining way. The team at LoanLove.com is devoted to help empower both first time and experienced homeowners with valuable resources, first-class knowledge and connections to top-rated industry professionals and has the mission of helping consumers and borrowers to obtain the latest information on mortgage lending trends, the real estate market and the U.S. financial landscape in order to help them obtain a home loan that they will love. A recently posted article on the website explains how housing interest rates are predicted using three different economic indicators.
The Loan Love guide says: “Especially in recent years, it seems like the news is always full of stories about the economy and the indicators that help evaluate it. Although it may seem these news stories are intended to do little more than cause anxiety (or boredom), in fact, these indicators can give consumers a fairly good idea of whether interest rates are going to rise or fall – and that can be very valuable information to anyone interested in buying or refinancing a home. If you’re trying to determine if now is the best time to lock in a rate, you might want to take a look at the following three indicators to get an idea of how interest rates are likely to move. These 3 things are solid predictors for when interest rates go up or down”
The first one of these predictors is GDP, the Gross Domestic Product. This is a quarterly report that reflects the dollar amount of all goods and services that were produced and sold by companies located in the U.S. in that time. Statistically, the economy grows about 2.6 percent per year, which causes interest rates to rise. The second indicator is CPI, the Consumer Price Index. A high CPI equals high interest rates and vice versa – low CPI, low interest rates. The last one is Payroll Employment, and again higher numbers can cause interest rates to rise and lower numbers to fall.
All of this alphabet soup – GDP, CPI and PE (or Payroll Employment) – are indicators of how well the economy is doing. All three of these indicators are tied to inflation and when the Federal Reserve expects inflation they raise interest rates. When the economy is stagnant they lower interest rates. The GDP, CPI and payroll indicators are coincident indicators, meaning they respond quickly to shifts in the economy. This is in contrast to the unemployment rate which lags behind the economy; shifts in unemployment do not have an immediate impact on the economy and their effect on inflation is delayed.
The Loan Love article says: “Next time the news shifts to the economy, don’t let your eyes glaze over or your mind wander: Keeping an eye on these rates and understanding what they mean can help you decide whether to lock in a rate now or whether to hold tight, which can end up saving you lots of money in the long run.”
For more information on these mortgage rate prediction indicators, please visit LoanLove.com to read the full article.