When you borrow money to purchase a home, you pay interest on that loan according to rates set by the market. Rates change all the time and are influenced by several factors.
What Causes Mortgage Rates to Change?
Bond Market Influence
Bonds have a considerable influence on interest rates. In a strong economy, more people buy stocks and fewer buy bonds, driving down their value and their price. When that happens, the yields must increase so the bond will have the proper payout. In turn, interest rates increase, including mortgage interest rates. So, in a stable economy with a strong stock market, you'll pay higher interest on your home loan. The converse is also true.
Other Economic Influences
Other market factors also affect interest rates. The Federal Reserve, unemployment rates, home sales, and consumer confidence all indirectly play a part in setting interest rates. I'm happy to discuss rate trends with you to help you make informed decisions.
Predicting the rise and fall of rates is best left to skilled economists. For the rest of us, locking in a mortgage interest rate when it's low is the main thing to remember.
How Rates Affect Your Buying Power
When rates climb, you may still be able to afford a wonderful home, but the size and desirability of the home you can afford may decrease. Your buying power will begin to recede: that is, you will ultimately get less home for your money. Even a one percent rise in mortgage rates will affect your purchasing power. Jumping into the housing market now could help you save money on both the cost of the home and on your mortgage loan.
Getting the Best Rate
Providing you with an accurate rate quote depends on a number of variables, such as your income and credit score, the type of property and transaction, and the term of the loan and loan size, to name only a few. We'll work with you to help you understand these factors and how they affect your financial future, as well as what steps can be taken to help you find the best available loan.