Blog

Blog

It can seem like the interest rates on your mortgage are determined by chance or some otherworldly power, but this is simply untrue. Analysts work hard to determine the cost of borrowing, and that information makes the services your mortgage company offers possible.  So what do mortgage companies look at when deciding what to charge for their money?

The 10 Year Treasury Bond Rule

The 10-year treasury bonds are the best indicator of fluctuations in mortgage rates. These investments are direct competitors for the same investment capital. Most mortgages are issued at 30-year amortization schedule but are usually paid off or refinanced every ten years. That means that an investor who places money in a mortgage is likely to see the maximum returns in about same period of time as that 10-year bond.

Investors put their money towards the investments that produce the most positive gain. When treasury bond rates increase, it means that lenders must charge a competitive interest rate to secure enough capital for mortgage loans and services.

The Money Supply

The amount of money in the economy has a direct impact on the cost of borrowing. When there is a lot of money and it is easy for banks to get, it makes it more difficult to earn profits from lending. They must lower the rates they charge for all loans. The lower rates encourage a higher volume of borrowing to make up the difference in profits. This is why governments often attempt to influence an economy with changes in monetary policy.

Market Conditions

Mortgages are a financial product. Like all other products and services, they are impacted by the laws of supply and demand.  A lender wants to work with stable borrowers and offers the rates that are competitive but profitable. When houses are in higher demand than supply, a higher mortgage rate is common. The opposite is true when there is surplus of housing.

Getting the best mortgage rate available helps you to afford a better home, but the timing is critical. Talk with your broker about your options.

July 15, 2016

Why Does the Mortgage Interest Rate Fluctuate?

It can seem like the interest rates on your mortgage are determined by chance or some otherworldly power, but this is simply untrue. Analysts work hard to determine the cost of borrowing, and that information makes the services your mortgage company offers possible.  So what do mortgage companies look at Read More
July 1, 2016

Profitable Compromises

Not everyone is able to afford their dream home starting out. You may have to be to cut back now so that you can have what you really want later on. The services of a good mortgage broker are there to help you decide what your most profitable compromises are. Read More
June 28, 2016

Is This the Year You Should Refinance?

  By now you have probably heard about the historically low interest rates that have been in the housing market for the last few years, but do you know if you should be taking advantage of these rates? Many mortgage lenders will advertise for anyone and everyone to come and Read More
June 2, 2016

Calculating How Much You Can Afford in a Home

When most people start their home buying process, they begin in what they think is the best place: searching current home listings for the right property to purchase. Finding that perfect home in the ideal neighborhood is the goal, and certainly the fun part of home shopping, but if you Read More
May 17, 2016

The 5 Phases of Buying a Home

If you’ve decided to begin the process of buying a new home, you might be uncertain of how everything will play out. While it may seem like a completely chaotic process, there is a method to the madness. With the proper preparations you can handle it much better. Here are Read More