Whether you’re considering a new mortgage or a refinance, one of the key factors you’ll be interested in is the rate you’re getting. This rate, which refers to the percentage of interest you’ll pay on the principal loan total, can hugely influence the total amount of interest you pay over the life of the loan.
At Altius Mortgage and our partners at Mortgage Ogden, we’re dedicated to helping you find the best mortgage rate for your personal situation. Many buyers, though, including first-time buyers, don’t fully understand how factors outside your own control can impact the market for general mortgage rates. With that in mind, here are several factors that contribute to the mortgage rate market shifting, and what they might mean for you.
In many cases, simple economic inflation will be the cause of some small changes in rates on the market. This is generally based on something called the Consumer Price Index (CPI), which is a monthly report that follows price changes for various goods and services around the country. It averages these changes for every item it tracks, then transfers the way these changes will impact cost-of-living and other important financial factors.
Now, fluctuations in the CPI won’t drastically change market interest rates necessarily. But inflation in general will increase home loan costs, while lower inflation will lead to better rates.
There are a few other important economic factors that may play a role in changing interest rates, also. These include jobs reports, Gross Domestic Product numbers, overall home sales, consumer confidence data, and possibly several other prominent indicators. Our pros can tell you about which major economic factors have the largest influence on mortgage rates.
In addition, the stock market and its known volatility can play a role here as well. However, this isn’t as simple as just whether the stock market is rising or falling – it’s about why this is happening.
For instance, new economic data of some kind will often shift the stock market based on differing expectations for growth in a certain area. While this might be good for your stock portfolio, it raises the potential of future inflation, which as we discussed above will lead to rising mortgage rates. The inverse generally tends to be true as well.
Finally, your own personal factors will play the largest role in the mortgage rates you can qualify for in nearly every case. One of the primary factors here is credit score, but there are other basic factors like your income rate, your employment situation and others.
For more on the external and personal factors that influence interest rates, or to learn about any of our mortgage loan services, speak to the pros at Altius Mortgage today.