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What Will The Trend Be For Mortgages In The Next Five Years?

By Jim Micheals

What Will The Trend Be For Mortgages In The Next Five Years? Read here for information on mortgage trends in the near future!

Over the past five years, mortgage applied for and approved have come in at record numbers. This was largely due to historically low interest rates and increasing housing prices across the country. Since the housing bubble has burst, the future of mortgages remains a mystery to many. While the future or mortgages is unknown, economic factors do point to several trends which could happen over the next five years.

Mortgage Interest Rates Will Increase

The first trend for mortgages in the next five years is an increase in interest rates. In late 2009 and early 2010 mortgage rates were at an all time low. The national average for a 30 year mortgage was below 5%, which made it the cheapest time ever to borrow from a traditional mortgage lender. Unfortunately, mortgage rates are now going to increase over the next five years. One reason interest rates are going to increase is because supply and demand. Since more and more people are looking to take advantage of the low interest rates, the demand of mortgages increase, which in turn will increase mortgage rates. Also, as the overall economy improves, inflation will naturally set in. To prevent inflation, the federal government will increase key interest rates, which in turn will lead to an increase in mortgage interest rates.

Mortgage Lenders Will Keep Tight Standards

The next trend for mortgages in the next five years is that mortgage lenders will keep tight standards and lending restrictions. In the mid 2000s, almost anyone could get approved for a mortgage. Lenders will offering mortgages to people with poor credit scores, unreliable streams on income, and to people who could absolutely not afford the mortgage payment or a down payment. Since the housing crisis has taken place, mortgage lenders have drastically increased their lending restrictions. Mortgage lenders now require adequate credit scores, a proven and reliable stream of income, and mortgage lenders now require at least a 10% down payment. In the next five years, mortgage lenders are likely to retain these tightened lending restriction. Although, if the housing market and overall economy do drastically improve, mortgage lenders may loosen their restrictions to remain competitive with other lenders.

Housing Values Will Improve Which Will Increase Refinances

The last trend for mortgages in the next five year is that housing values will improve which will increase mortgage refinances. While mortgage rates are at an all time low, many people are unable to refinance their mortgage because their housing values have fallen and they know longer have adequate equity in their homes. In many markets across the country, including Phoenix, Las Vegas, and Miami, housing prices have fallen by more 50% since 2006. Over the next five years, housing values are likely to stabilize and eventually increase slowly. Since housing prices may eventually reach their 2006 levels, more people will be able to refinance their mortgage.

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2. Will Low Mortgage Rates Save The Housing Market?
3. What Are The Best indicators For Future Mortgage Interest Rates?
4. What Can I Do When My Mortgage Loan Is Declined?
5. How Does The Trend Look On Current Mortgage Rates?