How Are Mortgage Rates Determined?

Have you ever wondered how mortgage rates are determined?

Mortgage rates are largely dependent on the changes in the market and economy. As common with stock markets, interest rates tend to fluctuate each day and this also applies to the mortgage market. Mortgage rates tend to rise when the economy is strong and drops when the economy falls.

Other factors that can also affect Mortgage interest rates include;
• The length of the mortgage loan: Mortgage rate for 15 years loans is quite lower than the 30-year loan. This is definitely one of the factors that tend to determine how high or low your mortgage rate may be.
• The type of mortgage loan: There are two major types of mortgage rates; fixed rate or adjustable. Depending on any of the types, mortgage rates tend to peculiar to that particular type.
• The amount of the loan. This is because it presents a higher risk and most lenders tend to base their mortgage rates based on the amount of risk the lender feel is associated with the loan.
• The amount of your loan vs. the value of the house ( known as LTV). The lower the loan, compared to the value of the home will generally yield a lower interest rate.
• Your credit score: Individuals with great credit score tend to receive mortgage loans at a lower mortgage rate than others.

Every client is different and we look forward to discussing your needs and finding the best loan possible, for your individual situation. Get your free mortgage rate quote today, Purpose Funding can help! Give us a call or fill out our online form now.

Toll-Free (844) 427-3863

2 replies
  1. Deb Pearl
    Deb Pearl says:

    My husband and I have been looking into getting a mortgage for a home we want to buy. While looking we saw that there were a lot of different rates, we were wondering what determines that. That is good to know that the types of mortgage loans have different effect on the rate, as well as the length of the loan. Thank you for the information!

    • John Pagnini
      John Pagnini says:

      We’re glad you found value in our post, Deb. We’re more than happy to go over options with you, when you’re ready! You can hit the chat button at any time to speak with one of our Mortgage Experts, use the contact form if you’d like to be contacted by email, or simply hit any of the call buttons throughout our site to be connected via phone. Thanks again for stopping by and God Bless!


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