What does a mortgage rate forecast chart tell you?


Quick Answer

A mortgage rate forecast chart tells the average daily rate per month for fixed mortgage rates, a forecast for the target month, projected interest rates within one year of the forecast and the Historical Data Test Forecast Accuracy percentile. Mortgage rate forecasts for 30-year conventional mortgages are usually available for 12 months and five years, notes Forecast-chart.com.

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Full Answer

The main purpose of a mortgage rate forecast chart is to show the average monthly rate, although it also shows the current month, called the target month. Information for the forecast charts is obtained from Freddie Mac, according to Forecast-chart.com.

A 12-month forecast shows the estimated interest rate in one year from the target month. For example, the November 2015 forecast chart shows a 4.08 percent, 30-year mortgage interest rate. That chart also shows Historical Data Test Forecast Accuracy of 0.44 percent. This accuracy forecast means that despite the projected 4.08 percent rate, the actual rate could actually be anywhere from 4.52 percent to 3.64 percent.

A five-year forecast shows the predicted interest rate for five years from the target date, and tells whether it will be higher or lower than the current rate. This chart also tells the probability percentiles of the projected rate going higher or lower and uses more than 40 years of historical information to make the calculations.

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