If you are planning on purchasing a home or need to renew your existing mortgage, it is essential to understand the variables that influence mortgage rates. Here are some insights on the various factors.
The state of the economy can significantly influence the interest rates on your mortgage. For instance, if the economy is doing well, the interest rates will likely be higher, and vice versa. This leads to consumer confidence.
Consumer confidence measures the level of consumers’ optimism about the economy. When consumer confidence is high, more demand for homes can push mortgage rates up.
The rate at which the prices of goods and services rise over time. Higher inflation often leads to higher interest rates, including mortgage rates.
Global events like natural disasters, political upheavals, and pandemics can also affect mortgage rates. Any significant global event that leads to economic uncertainty can cause a shift in mortgage rates (up or down.)
The term of your mortgage also influences the interest rates. Typically, a five-year term comes with a lower interest rate than a one-year term.
Let’s talk if you’d like to learn more about mortgage rates and how they could impact your mortgage. I would be happy to help you find the best mortgage options that work for you.