img
img
MyMoneyHelp home
Sign up for our newsletter!
Name:
Email:

corner cor cor
cor
MyMoneyHelp
Credit Reports
Personal Loans
Mortgages
Insurance
Debt Help
Credit Cards
Banking
Education Center
cor
cor cor co
corner cor cor
cor
Education Center
Banking
Credit Cards
Credit Reports
Debt Help
Insurance
Mortgages
Personal Loans
Glossary
cor
cor cor co
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Factors that affect mortgage rates
Factors that Affect Mortgage Rates

As part of your mortgage education process, it's important to know the factors that affect mortgage rates. Understanding a little bit about how the whole mortgage system operates and how changes in mortgage rates happen can translate into increased confidence on your part, confidence you'll need when navigating through all the lenders and their marketing buzzwords.

Factor 1: The Federal Reserve

Don’t blame the government for all the factors that affect mortgage rates; changes in mortgage rates are partly down to the Federal Reserve. The Federal Reserve, the central bank in the country, is responsible for setting the base rates that are used by lenders when they set out their own mortgage interest rates. So, if it raises the base rates, then most lenders will increase their standard interest rates. Luckily, it also generally lowers them if that happens to the base rate as well! The key aim here for the Federal Reserve is monetary stability, so it uses its rates to keep inflation low and to keep currency confidence.

This may not be one of the factors that affect mortgage rates in the short term for you if you are on a fixed rate deal, but it will have an affect on your mortgage costs if you have a variable deal.

Factor 2: Monetary Supply and Demand

The general economic climate and property market are closely connected. Here, it is often a question of supply and demand. So, if lenders are doing well and the economy is buoyant, then they’ll have more cash to lend and will be more willing to lend it at lower rates of interest. If things are tight (as they are at the moment) then they’ll think harder before approving mortgage loans and won’t offer such good mortgage interest rates. They may also implement changes in mortgage interest rates.

If things are good, then more people can afford a mortgage to buy a property and, with more people buying, property prices will rise. If things are tight, then people don’t have the spare cash to save with lenders, so they don’t have so much of a cash surplus, and will therefore be a bit more careful about how and who they give out mortgages. This leads to fewer property buyers which could result in lower property prices.

Factor 3: Borrower Quality

One of the other factors that affect mortgage rates is credit history. The better the credit-worthiness of the borrower and his or her ability to pay back a loan, the better the mortgage interest rate offered to that borrower. If you have few assets, an impaired credit record, or a less than stable employment history then you will probably have to pay a higher rate of interest.

Factor 4: Lender Type

The final one of the factors that affects mortgage rates is the type of lender. The rate offered will depend on the lender's policies and terms, which can vary greatly from lender to lender. So, you can see a lot of changes in mortgage interest rates from lender to lender. Generally speaking, conventional lenders (banks and credit unions) are usually quite competitive with their rates as they are keen to win new customers, although this is not always the case as economic factors can cause both positive and negative changes in mortgage rates.

As always, shop around when looking for the best mortgage interest rates, but also be aware of the factors that affect mortgage rates, and how it is that changes in mortgage rates are made!

Check out the best mortgage providers

 
 
 
 
 
 
 
banner

 
 
© MyMoneyHelp.com. All Rights Reserved.    Sitemap | Newsletter | About | Contact | Terms of Use | Privacy | Online Coupon Codes

Valid XHTML 1.0 Transitional

img