Mortgage rates predictions have headed steadily upward over the past year, because a number of important factors which influence mortgage interest rates predictions are pulling in the same direction at this time. Rising inflation always increases mortgage interest rates predictions, as does a credit squeeze like the current one, and of course the rising risk of foreclosurea and subsequent write-downs of house values.

The falling US dollar will also put more upward pressure on mortgage rates predictions. This will happen directly, as the government seeks to encourage investment capital to remain in the US, and indirectly, as the rising cost of imported goods feeds into inflation. Higher inflation rates increase mortgage rates predictions because inflation is passed on to borrowers. Lenders won't carry that loss of value in their cash.

July's figures have highlighted the impact of the current housing crisis on mortgage rates predictions. Whlie it began as a sub-prime mortgage crisis, it has now spread to the wider economy. Even responsible mortgages with a 20% down payment have turned upside down, as house prices in some parts of the country drop 30% or more, virtually overnight.

More than 77,000 repossessions were carried out in July 2008. Foreclosure filings were 50% higher than in the same month in 2007. More than 272,000 homes received at least one foreclosure-related notice in July - that is one in every 464 US households, or more than half a percent of all homes.

Having a large number of homes around in foreclosure and pre-foreclosure makes it increasingly difficult to sell homes for their full appraised value. Many buyers know there are bargains to be had, and simply don't make offers on homes at full price.

Bargain-hunting behavior, while understandable, further destabilises the market and increases the security risk across all loans. If sales are not happening at appraised valuations, then all property offered as security is potentially worth far less than its book value, at lesat for now.

This situation makes the risk managers in lending organisations twitch with anxiety, and they will be advising higher interest rates for mortgages across the board until the real estate market stabilises. Therefore, mortgage rates predictions are headed upward even further.

Mortgage rates predictions can be complex, because many different economic factors influence mortgage rate predictions. Right now, though, all the conflicting economic factors influencing mortgage rates predictions are aligned. We can confidently say that mortgage rates predictions are heading upward for the next few months, and possibly even the next few years.