Mortgage rates are always changing. This change in mortgage rates
is affected by several factors. One major factor that affects the
dynamics of mortgage rates is inflation. Inflation is characterized
by a booming economy and an increase in the prices of goods and other
commodities. When the economy is strong, prices of goods and services
rise, signaling the rise of real estate prices, apartment rents, and
mortgage rates as well.
When mortgage rates are high, then naturally demands for mortgages
and loans slow down. To avoid this kind of effect, the Federal Reserve
Bureau usually lowers down interest rates. This action will cause
inflation to reduce, the economy to slow down, and mortgage rates
to fall. Therefore, basically, the dynamics of mortgage rates is directly
affected by the rise and fall of interest rates.
But despite the tendency of mortgage rates to follow the direction
interest rates are taking, there are also several other factors that
affect mortgage rates. Mortgage rates base their movement on the supply
and demand for mortgages and loans. And because the supply and demand
ratio of mortgage rates slightly deviates from that of other rates,
mortgage rates tend to move differently when occasions arise.
For instance, a lender has a certain quota in the amount of mortgages
he can close in one month. In an effort to reach that quota, he would
have to lower down the mortgage rates of his products in order to
attract more buyers. Even though the market suggests that mortgage
rates should be high, lowering down his mortgage rates will help him
achieve his goal. This is another way of affecting the movement of
How Mortgage Rates are affected by other key factors
Mortgage rates are not only affected by inflation, the overall status
of the economy, and mortgage companies. Mortgage rates are also directly
affected by the amount of the money borrowed. If the amount of the
loan increases, mortgage rates rise up as well.
Certain standards in the amount of loan money given were established
to keep mortgage rates in control. The two commonest standards used
in the United States stock market are Fannie Mae and Freddie Mac.
Every year, the limits of loan amount is either extended or reduced,
depending on how mortgage rates are predicted to move. When the loan
money exceeds the limits set by either Fannie Mae or Freddie Mac earlier
that year, then the mortgage rate will increase.
"The price we have to pay for money is sometimes liberty.”
- Robert Louis Stevenson
Mortgage rates differ with the type of loan a buyer chooses. A fixed
rate mortgage usually has higher a mortgage rate when compared to
the mortgage rate of an adjustable rate mortgage. The adjustable rate
mortgage generally has a very low mortgage rate on its first year
but after that, the mortgage rates would depend on the changes on
the mortgage company’s prime rate.
Likewise, mortgage rates are affected by the duration of the loan.
30-year mortgages usually have lower mortgage rates compared to 15-year
mortgages. Lower mortgage rates allows buyers to save on their monthly
payments, thus letting them channel those extra funds to other good
investments. On the other hand, higher mortgage rates in 15-year mortgages
allow buyers to pay off their loan much quicker. This is because a
portion of their monthly payments on mortgage rates are used to pay
off the principal loan amount.
Additional Resources and Latest News:
Mortgage rates lower for Wednesday Bankrate.com
Several closely watched mortgage rates sunk lower today. The average for a 30-year fixed-rate mortgage decreased, but the average rate on a 15-year fixed ...
Mortgage rates move higher for Tuesday Bankrate.com
Several benchmark mortgage rates rose today. The average for a 30-year fixed-rate mortgage were higher, but the average rate on a 15-year fixed dropped.
Benchmark mortgage rate dips for Friday Bankrate.com
Mortgage rates moved in different directions today, but one key rate decreased. If you're in the market for a mortgage, see how your payments might be affected.
Mortgage rates rise for Monday Bankrate.com
Several closely watched mortgage rates notched higher today. See what that means for you if you're in the market for a home loan.
Mortgage rates tumble to 10-month low The Washington Post
Fixed mortgage rates sank to a 10-month low this week amid uncertainty about the health of the economy. According to the latest data released Thursday by ...
US mortgage rates fall to 10-month low NewsOK.com
WASHINGTON â€” U.S. long-term mortgage rates fell this week to a 10-month low, spurring on potential homebuyers for the upcoming season. Mortgage buyer ...
This is how mortgage rates vary by state HousingWire
A drilldown of mortgage rates by state highlights how the cost of a mortgage varies by location. A new study by LendingTree sought to analyze how rates differ ...
Mortgage Rates End Week at Lows Mortgage News Daily
Mortgage rates may not be quite as low as they were on January 31st, but they nonetheless managed to end at the lowest levels of this week. Unlike January ...
The Bottom In Housing May Be Near Seeking Alpha
The existing home sales report for January was the worst in over three years. But because it usually corresponds to new home construction, it can help us pinpoi.
Ford starts probe of gas mileage, emissions Chattanooga Times Free Press
Ford starts probe of mileage, emissions. Ford Motor Co. has launched an investigation into whether it overstated gas mileage and understated emissions from a ...
Mortgage rates lower for Monday Bankrate.com
Multiple closely watched mortgage rates sunk lower today. The average rates on 30-year fixed and 15-year fixed mortgages both trended down. Meanwhile, the ...
Key mortgage rates mixed for Tuesday Bankrate.com
Mortgage rates diverged today. The average for a 30-year fixed-rate mortgage was flat, but the average rate on a 15-year fixed receded. Meanwhile, the average ...
Key mortgage rates mixed for Friday Bankrate.com
Mortgage rates were mixed today. The average for a 30-year fixed-rate mortgage was flat, but the average rate on a 15-year fixed trended down. On the ...
Mortgage rates higher for Wednesday Bankrate.com
Several key mortgage rates notched higher today. The average rates on 30-year fixed and 15-year fixed mortgages both advanced. Meanwhile, the average rate ...
Key mortgage rates mixed for Thursday Bankrate.com
Mortgage rates were mixed today. The average for a 30-year fixed-rate mortgage held steady, but the average rate on a 15-year fixed floated higher. Meanwhile ...
Mortgage rates fall for Thursday Bankrate.com
Several benchmark mortgage rates trended down today. See what that means for you if you're in the market for a home loan.
Mortgage rates continue their upward march The Washington Post
Mortgage rates moved higher for the fourth week in a row and show no signs of abating. According to data released Thursday by Freddie Mac, the 30-year ...
Mortgage rates fall for Tuesday Bankrate.com
Several closely watched mortgage rates dropped today. If you're in the market for a home loan, see how that could affect you.
Mortgage rates ease for Friday Bankrate.com
Multiple benchmark mortgage rates declined today. If you're shopping for a mortgage, see how your payments might be affected.
Mortgage rates up for Friday Bankrate.com
Several closely watched mortgage rates advanced today. If you're in the market for a home loan, see what that means for you.
Important mortgage rate retreats for Friday Bankrate.com
Mortgage rates were mixed today, but one key rate declined. The average for a 30-year fixed-rate mortgage ticked downwards, but the average rate on a 15-year ...
Benchmark mortgage rate highers for Friday Bankrate.com
Mortgage rates diverged today, but one key rate rose. The average for a 30-year fixed-rate mortgage climbed higher, but the average rate on a 15-year fixed ...
Mortgage rates continue their summer swoon The Washington Post
Mortgage rates haven't done much lately, but they are at least moving in the right direction for home buyers. According to the latest data released Thursday by ...
Mortgage rates climb for Tuesday Bankrate.com
Several benchmark mortgage rates ticked up today. If you're shopping for a home loan, see how your finances could be affected.
Mortgage rates settle in for the summer The Washington Post
After a big jump to start the year, mortgage rates have settled in for the summer. According to the latest data released Thursday by Freddie Mac, the 30-year ...