Your Mortgage Interest Rate can be Affected by These Factors

by Bienek Properties of Sonoma 07/08/2019

Mortgage interest rates have a remarkable effect on the overall long-term cost of buying a property through financing. Mortgage borrowers are looking for the highest possible rates while lenders have to manage their risk by charging interest rates. Borrowers with good credit histories and stable finances are those who can access a mortgage with lower interest rates. The financial status of borrowers has a significant impact on the interest they can get; government fiscal policy and other economic factors can affect mortgage rates on a global level. Below are some of the factors that can affect your mortgage interest rates:

Inflation 

Inflation causes the price to rise gradually. It is a critical factor in the overall economy and an essential element for mortgage lenders. It reduces the purchasing power of dollars. And, mortgage lenders manage the interest rates such that it will be able to withstand the reduction of purchasing power through inflation to make sure that there is a real net profit on their interest returns.

The Level of Economic Growth

The gross domestic product and the employment rates are the economic growth indicators that have a remarkable effect on mortgage rates. When economic growth rates increase, there is higher income, and there is an increase in the level of consumer's spending which translates to a rise in consumers seeking mortgage loans. 

Federal Reserve Monetary Policy

The monetary policy of the Federal Reserve Bank is one of the essential factors that affect mortgage interest rates and the overall economy. The Federal Reserve Bank does not stipulate a specific price in the mortgage market, but the establishment of the federal funds' rates and the adjustment of money supply upward or downward have a pronounced effect on the mortgage interest rates that are available to borrowers.

Generally, a rise in the supply of money pressures rates downward while a reduction in money supply puts upward pressure on rates.

Housing Market Condition

The conditions and trends in the housing markets can influence mortgage rates. When there is a decrease in the number of new constructions, there is will a reduction in home purchases which automatically leads to a decline in demand for mortgages. This situation makes the interest rates to reduce. Another trend that affects the mortgage rate is the number of consumers renting an apartment instead of buying a home.

The rise and decline of mortgage interest rates operate based on the basic rules of demand and supply. All the factors mentioned above have a pronounced influence on mortgage rates. Most importantly, your financial standing affects your mortgage rate. It is essential to speak to a financial advisor before deciding on starting a home purchase and mortgage process.

About the Author
Author

Bienek Properties of Sonoma

Vince and Mary are well-respected by their REALTOR peers in Sonoma's Wine County for their hard work, dedication and integrity. They are passionate about real estate and have a proven track record of exceeding the needs and goals of their clientele. Vince and Mary work as a team. Together, they make up one of the most successful teams in Sonoma County. They specialize in applying their expertise and market knowledge to consistently meet and exceed the needs and goals of their clients. Vince and Mary work with sellers, buyers and investors in both residential and commercial markets.

They have built a reputation for tenacity and protecting the interests and investments of their clients. Vince attended Oral Roberts University in Tulsa, OK, where he studied Business Administration. As a collegiate baseball player, Vince helped lead Oral Roberts University to their only appearance in the College World Series in 1978. After college, Vince played professional baseball for five years in the Chicago White Sox Organization. Vince has a strong background in sales, sales management and the building products industry. As part of his sales management experience, Vince successfully negotiated national contracts with the top 20 builders in the United States. These skill sets have enabled him to be a strong asset for his clients. Mary attended college at the University of Kentucky before completing her BS in Sociology at California State University, San Bernardino.

Mary has been in the business of helping people make the "move" to their next landing place for many years. Be it a home across town or across the country, Mary has paved the way for many buyers and sellers to transition into the next phase of their lives. Vince and Mary are also active volunteers in the Sonoma Valley. They volunteer at Relay for Life, Vintage Festival, Sonoma Film Festival, as well as The Boys and Girls Club of Sonoma Valley. They have a passion for the community they live and work in.