KNOWLEDGE IS POWER

WHAT FACTORS AFFECT MY INTEREST RATE?

When you shop rates, it's important to get ACCURATE rate quotes and not fall for teaser rates some lenders push on social media feeds and google searches.

The BEST way to shop rates/costs is actually to provide the key data points below that influence rates and then ask the lender to provide a Loan Estimate.

  • Loan product type (Conventional, FHA, Jumbo, etc)
  • Loan-to-value (how much you put down or equity you have)
  • Credit Score (your middle score of the 3 bureaus)
  • Loan Size (how big the loan is)
  • Occupancy (primary, second home, investment)
  • Type of transaction (purchase, cash out refinance, rate/term refinance)
  • Property type (multi unit, single family, condo, single wide, double wide manufactured home, land)
  • Location - (Lenders need the zip code at the very least; a full address is recommended.)

Want to know what market factors drive rates up or down so you can be in the know? Learn here.

GET ACCURATE RATE & PROGRAM OPTIONS

KNOWLEDGE IS POWER

WHAT DRIVES RATES UP AND DOWN?

Mortgage rates are influenced by a multitude of market factors, each contributing to the overall borrowing costs for homebuyers. Understanding these key influencers is crucial for navigating the complex mortgage landscape. Here are some of the primary market factors that impact mortgage rates:

  • Economic Indicators: Factors such as inflation rates, employment levels, and overall economic growth profoundly affect mortgage rates. Strong economic performance tends to push rates higher, while economic downturns can lead to lower rates.
  • Central Bank Policies: Monetary policies set by the Federal Reserve have a significant impact on mortgage rates because the interest rate at which the Fed lends to your bank, then in turn affects the mortgage or car loan rates your bank offers.
  • Mortgage Market Dynamics: Supply and demand dynamics within the mortgage market play a crucial role in determining rates. Lenders' willingness to lend and borrowers' demand for loans can affect the overall rate environment. If default rates or the number of foreclosures are rising, that can in turn affect rate trending.
  • Investor Sentiment: Investor sentiment and market expectations can also influence mortgage rates. As they say, the markets are fueled by two things: fear and greed (hope of gain/fear of loss). Investors' appetite for mortgage-backed securities and other financial instruments tied to mortgages can affect the rates offered to borrowers.
  • Bond Market: Bonds predict the future! Mortgage rates often move in tandem with the bond market, particularly the yield on the 10-year Treasury note. This relationship exists because mortgage-backed securities are often traded in bond markets, and changes in bond yields can impact the pricing of these securities, subsequently affecting mortgage rates.

These market factors interact in complex ways, making mortgage rate forecasting challenging. However, staying informed about these influences can empower borrowers to make more informed decisions when securing a mortgage. You can count on the #mortgagedad to keep you apprised of market shifts so you can time your rate lock strategically!


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