Last week, I argued that the super low mortgage rates could actually be contributing to strategic defaults.

The general idea being the low rates today make it even less desirable to hold a “high-rate” mortgage from the past.

The only positive from this assumption is that homeowners in this position may buy a new home and bail on the old one.

That’s a positive for them, minus the credit score hit, but a negative for the housing market and mortgage lenders .

And now it has occurred to me that the promise of low mortgage rates for the foreseeable future may have the unintended consequence of hurting home sales, at least in the near term.

You see, a new poll from mortgage financier Fannie Mae revealed that just 33 percent of consumers expect mortgage rates to rise in the next 12 months.

That figure is down from 45 percent a month ago, and is the lowest number Fannie has recorded since their monthly tracking began.

At first glance, it sounds like great news. Mortg

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By now, you’ve probably seen or heard that mortgage rates are at or near record lows.

While this is true, it doesn’t mean everyone out there qualifies for a record low mortgage rate.

The low, low mortgage rates you see advertised on television and elsewhere always assume you have an excellent credit score.

In other words, 720 and above, or even 760 and above in some cases.

I recently came across a credit score table from Fico®, the inventors of the Fico score, which illustrates the difference in mortgage rate at different credit scoring levels.

As you can see, a credit score between 760-850 qualifies for the lowest rate, which is a rather arbitrary 3.954% APR (I say arbitrary because a bunch of other factors affect mortgage rates as well).

But we can still pull some value out of this table by looking at the other credit scores and associated mortgage rates.

For example, if your credit score is 620 (what I consider a bad credit score), your mortgage rate shoots up to 5.543%.

That’s more than one-and-a-half percentage points – on a $300,000 loan amount, the difference in monthly payment is nearly $300!

So always be sure to check your credit report months before even thinking of applying for a mortgage to avoid any unexpected surprises and unnecessary rate increases.

Remember, the difference between a good credit score and a bad credit score could be enough to kill your hopes of getting a mortgage altogether!

Tip: How to raise your credit score.

Anyone who has owned a credit card within the last decade has been subjected to rising interest rates, regardless of their credit score or financial habits. Unfortunately, most cardholders are not aware of the change until a statement arrives in the mail with elevated interest charges.

Some individuals with exceptional credit become outraged about the change and try to close the credit account while some charges remain outstanding. While this may seem like the fair and just course of action, it will often result in damage to the credit score. The following information can help anyone deal with and prevent rising interest rates in the right way.

Why Interest Rates Change

Interest rates tend to fluctuate as often as the economy does, which makes them just as unpredictable.

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While the economic crisis has ushered in a frenzy of interest rate cuts from the Reserve Bank of Australia, many credit card providers are flatly refusing to bring down rates on their credit cards.

Speaking to the Brisbane Times, Christopher Zinn, a spokesperson for consumer watchdog Choice, said that it was time banks and other lender brought out new cheap credit cards that took the RBA rate cuts into effect.

“The fact that they have actually failed to move significantly in terms of the reduction in the cash rate … does make us wonder why it hasn’t come down,” he said.

Earlier this month, Mozo alerted customers to another flaw with seemingly cheap credit card offers after research revealed that many cards come with hefty penalties if balance transfers aren’t paid off within the introductory period.

Interest rates were found to rise to as much as 19.99 per cent, Mozo found, with NAB, Commonwealth and Westpac among the main offenders.

With the Reserve Bank deciding to leave interest rates on hold this month, it is unlikely that those who compare credit cards will find rates getting any lower.

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