Mortgage Rate Fluctuations and Movements: What Causes Them?

If you are planning to buy a new home or sell one, the time to act may be now. The record-low rates have made homebuyers and homeowners looking to refinance their mortgages, stay right at the edge of their seats. They have been waiting for the opportunity to take advantage of these great rates. However, to ensure that you are able to make the right move, it is important to understand the factors that drive mortgage rates up and down.

Mortgage Rate Fluctuations and Movements

Here are the specifics that contribute in deciding whether it is the right time to go into a real estate transaction or mortgage refinance. This crash course will hopefully help you discern how to best go about making this decision and save you a ton of money on a new mortgage or refinance.

1. Economic Conditions. Economic conditions play a role in the direction of mortgage rates. These events influence the confidence of investors, influences mortgage pricing. When the economy is doing particularly well, there will be an increased amount of consumer spending and positive GDP growth. These factors will lead the real estate market prices to go higher. Opposite conditions will almost certainly drive a drop in the market prices.
2. The Federal Reserve. While the federal government does not have a say in how real estate prices go up and down, the central bank’s decisions can influence them. These decisions typically drive shorter-term products, like credit cards or home equity lines of credit. Because mortgages come in packages of securities and are sold as mortgage bonds, the rates are determined by the interest of the return investors to buy these bonds.
3. Inflation Rates. As one would imagine, inflation will also have an effect on the fluctuation of mortgage rates. Inflation happens when there is market growth, which is why mortgage rates may be affected in one way or another when inflation rates rise and fall. Consumers’ purchasing, Power will be limited when inflation rates rise, and this will influence the lenders when they set mortgage rates.
4. Your Personal Credit and Financial Situation. When applying for a mortgage, your personal financial situation will have an effect on the rates you receive on the mortgage. Having good credit will give one a better chance of getting approved with a reasonable mortgage rate. The adverse may yield the opposite outcome. The good news is that this factor may be controlled by you. There are ways to improve your credit and will directly affect your chances of getting a more favorable mortgage rate.

Contact Florida Mortgage Specialist Today!

Knowing the factors that go into the rise and fall of mortgage rates will help you decide if buying, selling, or refinancing is a good idea or not. Should you find yourself in a bind and not know what type of mortgage to apply for or if getting a mortgage refinance is wise, working with a skilled and experienced mortgage broker is the key. If you are looking to apply for an FHA loan in Louisville, come to American Mortgage Solutions. We have financed home buyers’ and homeowners’ dreams! We are proudly licensed in and serve throughout the states of Kentucky, Florida, Indiana, Colorado, and Tennessee. We help homeowners in Kentucky you can give us a call at (502) 327-9770 or in Florida please call (239) 766-8344.