Which Factors Impact Mortgage Interest Rates?
Fluctuation Of Mortgage Interest Rates Can Happen For Many Reasons
The home buying process is full of important numbers. Mortgage interest rates can be the most important of the group since they have an important impact on your monthly payment. They can fluctuate throughout the process of deciding to buy a home.
But what causes them to go up or down? There are multiple factors that can cause it to shift.
Your Risk Factor
If the lender sees you as a risky buyer, the interest rate can be higher than for others. A small down payment or a bad credit score can both play a role in that happening. Home buyers with an ideal credit score and a sizable down payment will have access to the lowest rates.
Lenders value security from the buyer. A good credit score can show that, but a strong down payment is also an important area the lender will look at.
Fears about the United States’ economy can impact mortgage interest rates. When the stock market plummets and there is uncertainty about it, mortgage rates tend to fall. On the other side, the economy’s improvement can send mortgage interest rates higher.
The stability of the economy is an important factor in getting the best mortgage interest rate you can when the time comes to buy. Inflation can also play a role in the direction of rates. When the inflation rate is high, interest rates are likely to follow it.
Supply and Demand
When there is a higher demand for homes, mortgage interest rates can increase. When the demand is lower, rates can decrease.
Supply and demand can also be impacted by how much a bank has available. When a customer opens a bank account, the money put in it becomes available for the bank to lend to other customers. The more a bank is able to lend, the more credit is available to a potential home buyer. Mortgage interest rates can drop when that supply is greater.
Natural disasters or instability with politics can drive interest rates down. When issues happen overseas, it can create questions about the future of the United States economy. That anxiety can cause investors to move money to places that are safer, such as mortgage-backed securities.
The desire for these safer areas can drive down interest rates, benefitting potential home buyers.
At Chris Doering Mortgage, we can help with any of your concerns about mortgage interest rates in Gainesville and Ocala. Feel free to contact us online or give us a call at 352-244-0840. You can also get pre-qualified with our online home loan application.