with the recession happening next year.. how much will my mortgage go up by?
by Mortgage Rates on Wednesday, September 22nd, 2010 | 5 Comments
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As long as you do not have some sort of “teaser” rate or a negative amortization loan, your interest rate probably won’t go up much if it all. In fact, it could drop.
The Federal Reserve tends to drop interest rates in bad economic times.
The recession has nothing to do with your mortgage payments, unless of course you are one of those that got a loan you could not afford to pay back.
Your payment depends on the contract you signed or the deal you get to renegotiate.
We have a recession since January 2008.
Recessions don’t affect mortgage rates.
If we have an inflation, they will go up, if we have deflation, they will go down. My bet is, that they will stay around 5 – 6,5 % for the next 12 month.
Next year we will have 7 – 8% unemployment, world wide recession and we won’t pull out until 2012, just my guess. (I predicted DOW at 7000, 2 years ago)
Read your contract, it will tell you exactly how much. It will not change, recession or no recession. It is whatever you personally agreed it would be.
Typically people pick mortgages that go up 2 percentage points every 6 months until they reach a certain preset amount, typically a little over 12%.
This is the mortgage you wanted, we do not know which one you thought was just a great idea, so we can not tell you how much it will increase by. But, it will not increase by more then you already agreed to.
Without seeing your note it’s impossible to tell if it will go up at all. What you want to look at is which index your adjustable rate is based on and the margin your lender gave you. When your rate is set to adjust the lender will look at the index, add the margin, and this will be the interest rate you will pay until the next time your rate adjusts again.
A recession generally means rates come down as investors look for the safety of bonds. But all the old rules are out the window right now and no one knows what to do so it’s hard to say. “The Fed” rates and rate cuts have little, if anything, to do with mortgage rates. Unless your index is tied to the Prime Rate, something almost no 1st mortgages are.