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Looking back at the interest rates of housing loans and mortgages, there is an apparent decline in the interest rates of mortgages in the country. The numbers of today's mortgages are compared to numbers dating back as far as the 1960's.

Inflation, rise of oil prices and the availability of funds and credit have contributed to the steep rise of mortgage rates as high as 15-18 percent during the last three decades. However, due to the impending global financial crisis and government intervention, today's rates are at a low rate of an average of 4-6 percent.

Just as any volatile trend in the financial market, predicting mortgage rates have been very hard. Just like before, predicting the actual rate of interest in mortgages have been very broad just as weather prediction. However, using the same techniques used in weather prediction, financial experts have employed a range system in predicting the value of mortgage rates. These moderate predictions are influenced by many factors - inflation, commodities and government influence to name a few.

Interest rates go up because of inflation and reduced availability of credit. Factors such as the increase in oil prices create an upward pressure to the interest rates in mortgages. Similarly, as financial markets operate on the concept of supply and demand, they set the standards for the interest rates. A large supply of money lessens the demand for loans, and vice versa, which affects the interest rates of mortgages.

With regards to the mortgage rates of today, government intervention has played a big role in its decline. With the apparent fear of people losing their homes and seeing foreclosure, not to mention losing the government's trust, the government has provided legislation and rulings that ultimately lowered the interest rate homeowners had to pay for their loans.

Good or Bad?

Some political analysts have postulated that the government's intervention on lowering interest rates may be beneficial for the mean time, but is detrimental to the market in the long run. Some, however, believe that this will help the market recuperate from the current financial crisis.

Supporters of this plan on lowering interest rates on home loans believe that this is one way of increasing the demand for home ownership, and thus spark the economy, albeit in a little way.  One of the main objectives in this plan of lowering mortgage rates is to stimulate a demand for homes, and make loans such as business, consumer and mortgage loans more available at a lower cost.

Market Average of Mortgage Rates

As of this month, top mortgage companies such as Fannie Mae and Freddie Mac has reported that the rate for fixed mortgage loans dropped to an all-time low. For the 30-year loan alone, the rate dropped from 4.85 to 4.78 percent, the lowest since 1971.  15 year fixed mortgage rates dropped to an all time low of 4.52 from 4.58 percent as well.