What’s Ahead For Mortgage Rates This Week – March 25th, 2019

What’s Ahead For Mortgage Rates This Week – March 25th, 2019Last week’s economic news included readings from the National Association of Home Builders, Federal Reserve Federal Open Market Committee and a press conference by Fed Chair Jerome Powell.

Sales of pre-owned homes in February were reported along with weekly readings on mortgage rates and new jobless claims.

NAHB: Builder Confidence Unchanged Despite Headwinds

Home builders remained confident about housing market conditions in March. The NAHB Housing Market Index posted a reading of 62, which matched February’s reading and fell one point short of expectations. NAHB Index readings above 50 represent a positive outlook on housing market conditions.

Home builders continued to face obstacles including high materials costs and lack of buildable lots and labor. Analysts said builders focused on building larger homes, which were not affordable for many prospective buyers.

FOMC: Fed Puts Brakes on Interest Rate Hikes

Monetary policymakers reversed course on raising the target range for federal funds and voted not to raise the current rate range of 2.25 to 2.50 percent. FOMC members cited global economic concerns including Brexit and wavering economic conditions in China.

While the U.S. Labor sector was strong with ongoing jobs and wage growth and low national unemployment, FOMC members said that the Fed could be “patient” about raising rates and did not expect to raise rates in 2019. Slowing economic growth and inflation were reasons for holding interest rates steady.

Fed Chair Jerome Powell described the current economy as “good” and said that the Fed would gradually roll back its accommodative purchase of treasury bonds. This news was likely to cause yields on 10-year Treasury notes to fall; this would cause mortgage rates to fall due to their connection with 10-year Treasury notes.

Pre-Owned Home Sales Hit 11 Month High in February

The National Association of Realtors® reported 5.50 million sales of pre-owned homes on a seasonally-adjusted annual basis. February sales reading fell short of 5.12 million sales expected but were higher than the rate of 4.93 million sales in January.

February’s reading was 11.80 percent higher than January’s sales. The sales pace was 1.80 percent lower year-over-year, but the median sale price of preowned homes was $249,500., which was 3.60 percent higher year-over-year.

First-time buyers accounted for 34 percent of sales; this falls short of the typical 40 percent participation rate for first-time buyers. Affordability and strict mortgage qualification requirements continued to challenge first-time and moderate-income buyers.

Mortgage Rates, New Jobless Claims Fall

Freddie Mac reported lower average rates for fixed rate mortgages. 30-year fixed mortgage rates were three basis points lower and averaged 4.28 percent; Mortgage rates for 15-year fixed rate mortgages averaged 3.71 percent and were five basis points lower on average. The average rate for a 5/1 adjustable-rate mortgage was unchanged at 3.84 percent. Discount points averaged 0.40 percent for fixed-rate mortgages and 0.30 percent for 5/1 adjustable rate mortgages.

First-time jobless claims were lower last week with 221,000 new claims filed. Analysts expected 225,000 new claims based on the prior week’s reading of 230,000 new claims filed.

Whats Ahead

This week’s scheduled economic news includes readings on housing starts and building permits issued, new and pending home sales and inflation. Weekly readings on mortgage rates and new jobless claims will also be released.

What’s Ahead For Mortgage Rates This Week – March 4th, 2019

What’s Ahead For Mortgage Rates This Week – March 4th, 2019Last week’s economic reports included readings from Case-Shiller Housing Price Indices and Commerce Department reports on housing starts and building permits issued.

Readings on pending home sales and consumer confidence were released along with weekly reports on mortgage rates and initial jobless claims.

Case-Shiller Home Price Growth Slows to Lowest Rate in Four Years

Home prices continued to grow in December but reached their slowest pace since November2014. Seasonally-adjusted annual home price growth reached 4.70 percent in December as compared to growth of 5.10percent year-over-year in November.

Analysts cited high home prices, and slim inventories of available homes, although demand for homes eased in some metro areas. Affordability and accessibility to mortgages sidelined low and moderate-income buyers; some buyers allegedly gave up on buying homes.

Building more homes is necessary for relieving the housing shortage; real estate pros, mortgage lenders and home buyers rely on home builders to provide enough housing for first-time buyers and existing homeowners to transition from renting to owning and for existing homeowners to move up to aspirational homes. 

Housing starts fell short of expectations in December with a seasonally-adjusted annual rate of 1.078 million starts. Analysts expected 1.28 million starts based on November’s reading of 1.214 million housing starts. Construction was affected by winter weather and higher costs for building materials.

Pending Home Sales Rise in January

Pending home sales increased in January; sales with signed purchase contracts rose 4.6- percent as compared to December’s negative year-over-year reading of -2.30 percent. The National Association of Realtors® said that all four U.S. regions reported higher readings for pending home sales. The Northeast reported 1.60 percent more pending sales, Midwest and Southern regions reported increases of 2.80 percent and 8.90 percent, and the Western region reported 0.30 percent more pending home sales.

Mortgage Rates, Hold Steady New Jobless Claims Rise

Freddie Mac reported no change in 30-year fixed mortgage rates, which averaged 4.35 percent. The average rate for 15-year fixed rate mortgages dropped one basis point to 3.77 percent; mortgage rates for 5/1 adjustable rate mortgages were unchanged at 3.84 percent. Discount points averaged 0.50 percent for fixed-rate mortgages and 0.30 percent for 5/1 adjustable rate mortgages.

First-time jobless claims matched expectations of 225,000 claims filed as compared to 217,000 first-time claims filed the prior week. The University of Michigan Consumer Confidence Index rose to an index reading of 131.4 and exceeded the expected reading of 124.7.

January’s reading was 121.7. Rising consumer confidence may compel would-be home buyers to enter the housing market during peak buying season in spring and summer.

Whats Ahead

This week’s scheduled economic reports include readings on January housing starts, construction spending, and new home sales. Weekly readings on mortgage rates and new jobless claims will be released along with labor-sector reports on public and private sector jobs and the national unemployment rate.

 

What’s Ahead For Mortgage Rates This Week – February 4th, 2019

What’s Ahead For Mortgage Rates This Week – February 4th, 2019Last week’s economic reports included readings new and pending home sales, Case-Shiller housing market indices and consumer sentiment. Weekly reports on mortgage rates and first-time jobless claims were also released.

New Home Sales Rise as Pending Home Sales Fall

Sales of new homes rose 17 percent in November for an eight-month high. Year-to-date sales of new homes were only 2.70 percent higher than for the same period in 2018.New home sales rose to 657,000 sales as compared to expectations of 563,000 sales and November’s reading of 562,000 sales. Analysts cautioned that Commerce Department readings for new home sales are prepared from a slim sampling of sales and are subject to volatility.

Pending home sales slumped in December to a negative reading of -2.20 percent as compared to November’s seasonally-adjusted annual reading of -0.90 percent. Analysts said the dip was likely caused by consumer concerns over the government shutdown and potential future shutdowns.

December’s reading was the twelfth consecutive negative month-to-month reading. Real estate pros and analysts cited ongoing challenges including high home prices and mortgage rates as contributing to fewer contract signings.

In related news, the Federal Reserve’s Federal Open Market Committee elected not to raise the Fed’s target federal funds interest rate range, which is currently 2.25 to 2.50 percent. Domestic and global economic concerns led committee members to pause interest rate hikes.

Case-Shiller reported lower home price growth in November with a year-over-year annual reading of 5.20 percent growth. Las Vegas, Nevada, Seattle Washington and Denver Colorado held the top three spots on the Case-Shiller 20-City Home Price Index.

Mortgage Rates, New Jobless Claims Rise

Freddie Mac reported slightly higher average mortgage rates last week; 30-year fixed mortgage rates averaged 4.46 percent and were one basis point higher than for the prior week. 15-year fixed mortgage rates averaged 3.89 percent and were also one basis point higher.

The average rate for 5/1 adjustable rate mortgages was six basis points higher at 3.96 percent. Discount points averaged 0;50 percent for 30-year fixed rate mortgages and 0.40 percent for 15-year fixed rate mortgages. Discount points for 5/1 adjustable rate mortgages averaged 0.30 percent.

First-time jobless claims surged last week to 253,000 new claims filed. Analysts attributed the spike in new jobless claims to seasonal quirks that were not expected to last. The four-week rolling average of new jobless claims is considered less volatile and rose by 5,000 new claims to 222,250 initial claims filed.

The University of Michigan released its Consumer Sentiment Index last week; the January index reading of 91.20 was higher than the expected reading of 90.70 but was the lowest since President Trump’s election. December’s index reading was 98.30; analysts blamed the government shutdown on the sudden dip in consumer confidence.

Whats Ahead

This week’s economic news includes the President’s State of the Union speech and speeches by Fed Chairman Jerome Powell. Weekly reports on mortgage rates and new jobless claims will also be released.

What’s Ahead For Mortgage Rates This Week – January 28th, 2019

What’s Ahead For Mortgage Rates This Week – January 28th, 2019Last week’s economic news included readings on sales of previously owned homes and weekly readings on average mortgage rates and new jobless claims. A scheduled report on sales of new homes was not available due to the government shutdown.

National Association of Realtors®: Sales of Pre-Owned Homes Lowest in 3 Years

Sales of previously owned homes fell in December and failed to meet expectations. 4.99 million pre-owned homes were sold on a seasonally-adjusted annual basis; analysts predicted 5.10 million sales based on 5.33 million sales in November 2018. December’s reading showed the lowest number of sales since November of 2015.

Sales of previously-owned homes fell 6.40 percent month-to-month and were 10.30 percent lower year-over-year. Inventories of previously-owned homes also slipped in December with a 3.70 months supply of homes as compared to 3.90 months supply of available homes in November. Real estate pros consider six months supply of homes for sale as an average inventor.

Real estate pros said that lower buyer traffic in all regions of the U.S. could indicate less interest from buyers, but on a positive note, fewer buyers also remove the high rates of competition seen in the recent past.

Lower mortgage rates are well-timed for the upcoming spring sales season. Real estate pros were hopeful that lower mortgage rates will hold and entice more buyers into the market.

Mortgage Rates Mixed, New Jobless Claims

Freddie Mac reported no change in average interest rates for fixed rate mortgages. The average rate for 30-year fixed rate mortgages held at 4.45 percent; the average rate for a 15-year fixed rate mortgage was also unchanged at 3.88 percent. Rates for 5/1 adjustable rate mortgages averaged three basis points higher at 3.90 percent. Discount points averaged 0.40 percent for fixed rate mortgages and 0.30 percent for 5/1 adjustable rate mortgages.

First-time jobless claims fell to 199,000 new claims filed. Analysts expected 218,000 new claims to be filed based on the prior week’s reading of 212,000 new claims filed. Last week’s reading represented the first time since 1969 that new jobless claims fell below 200,000, but analysts were wary of potential impact of the government shutdown on new jobless claims. The shutdown ended on Friday until February 15, but politicians seemed unenthusiastic about future shutdowns.

Whats Ahead

This week’s scheduled economic reports include Case-Shiller Home Price Indices and readings on pending home sales, construction spending and the post-meeting statement from the Federal Reserve’s Federal Open Market Committee.

Labor sector readings on private and public employment and the national unemployment rate will also be released. Weekly readings on mortgage rates and new jobless claims will be released on schedule.

What’s Ahead For Mortgage Rates This Week – December 10th, 2018

What's Ahead For Mortgage Rates This Week - December 10th, 2018Last week’s economic reports included readings on construction spending and Labor Department readings on private and public jobs growth. The Consumer Sentiment Index was released along with weekly readings on mortgage rates and new jobless claims.

Construction Spending Slows in October

Residential construction slowed in last month as public works projects increased. Private sector construction spending fell by -0.10 percent as compared to expected growth of 0.30 percent and last month’s negative reading of -0.10 percent.

Construction spending for October was $1.309 billion on a seasonally adjusted annual basis as compared to September’s revised reading of $1.311 billion. Overall construction spending was 4.90 percent year-over-year.

Homebuilders continued to be wary of tariffs on building materials and cited high labor costs and a shortage of buildable lots. Winter weather also slows construction in many areas of the U.S.

Mortgage Rates, New Jobless Claims Fall

Freddie Mac reported lower average mortgage rates last week. Mortgage rates for a 30-year fixed rate mortgage fell by six basis points to 4.75 percent; rates for 15-year fixed rate mortgages were four basis points lower at 4.21 percent on average.

Rates for 5/1 adjustable rate mortgages averaged five basis points lower at 4.07 percent. Discount points averaged 0.50 percent for 30-year fixed rate mortgages and 0.40 percent for 15-year fixed rate mortgages. 5/1 adjustable rates had average discount points of 0/30 percent.

First-tome jobless claims were lower last week with 231,000 new claims filed as compared to an expected reading of 224,000 new claims filed and the prior week’s reading of 236,000 new jobless claims filed.

Labor Department: Slower Jobs Growth in Public, Private Sectors

The Bureau of Labor Statistics reported fewer jobs added to Non-Farm Payrolls in November. 155,0000 public and private sector jobs were added as compared to expectations of 190,000 jobs added and October’s reading of 237,000 new jobs added. ADP reported 179,000 private sector jobs added in November as compared to 225,000 jobs added in October. The national unemployment held steady at 3.70 percent.

Consumer sentiment was unchanged in November with an index reading of 97.50 according to the University of Michigan’s Consumer Sentiment Index.

Whats Ahead

This week’s scheduled economic releases include readings on inflation, retail sales and weekly reports on mortgage rates and first-time jobless claims.

 

What’s Ahead For Mortgage Rates This Week – December 3rd, 2018

What’s Ahead For Mortgage Rates This Week – December 3rd, 2018Last week’s economic news included readings from Case-Shiller Home Price Indices, sales of new homes and pending home sales. FHFA increased maximum loan limits permitted for mortgages held or guaranteed by Fannie Mae and Freddie Mac. Weekly readings for mortgage rates and first-time jobless claims were also released.

Case-Shiller Indicates Slow-Down in Home Price Growth

Home prices slowed their growth in September according to Case-Shiller. David Blitzer, CEO and Chairman of S & P Dow Jones Indices, said “Home prices plus data on house sales and construction confirm the slowdown in housing.

Rapidly rising home prices have sidelined new and moderate-income home buyers; slim inventories of homes for sale and recently rising mortgage rates also squeezed options for home buyers.

Home prices grew at a seasonally-adjusted annual rate of 5.70 percent in September as compared to 5.70 percent during August. September’s reading was the lowest in nearly two years, but remains close to twice the growth rate for wages.

Las Vegas, Nevada held first place for home price growth with a seasonally-adjusted annual growth rate of 13.50 percent. San Francisco, California followed with a year-over-year growth reading of 9.90 percent. Seattle, Washington held third place for home price growth with a year-over-year reading of 8.40 percent.

New and Pending Home Sales Dip in October

The Commerce Department reported fewer sales of newly-built home in October to 544,000 sales as compared to September’s reading of 597,000 sales of new homes. Analysts predicted a reading of 589,000 sales for October. Home sales slow as winter weather and holidays approach, but higher mortgage rates also caused the dip in sales.

Pending home sales are sales where a purchase offer is made, but the sale of a home has not closed. Pending home sales were -2.60 percent lower in October as compared to 0.70 percent growth in September. The National Association of Realtors® reported an October index reading of 102.1 as compared to September’s reading of 104.8 in September, which represented a 2.60 percent decline in contract signings. This was the lowest reading for contract signings since June 2014.

Mortgage Rates, Higher Loan Limits and New Jobless Claims

Freddie Mac reported mixed results for average mortgage rates; Rates for 30-year fixed rate mortgages were unchanged at an average of 4.81 percent; rates for a 15-year fixed rate mortgage averaged one basis point higher at 4.25 percent and the average rate for 5/1 adjustable rate mortgages was three basis points lower at 4.12 percent. Discount points averaged 0.50 percent for 30-year fixed rate mortgages, 0.40 percent for 15-year fixed rate mortgages and 0.30 percent for 5/1 adjustable rate mortgages.

The Federal Housing Finance Agency announced higher loan limits for home loans owned or guaranteed by Fannie Mae and Freddie Mac. The maximum loan amount for conforming mortgages was raised 6.90 percent to $484,350. The maximum loan amount for mortgages in high priced counties will be based on 150 percent of the $484,300, which is $726,525.00.

New jobless claims were higher last week with 234,000 new claims filed. Analysts expected 220,000 new claims based on the prior week’s reading of 224,000 first-time claims filed.

Whats Ahead

This week’s economic news releases include readings on construction spending and labor sector reports on public and private sector job growth. The national unemployment rate will be released along with weekly readings on mortgage rates and first-time jobless claims.

What’s Ahead For Mortgage Rates This Week – October 29th, 2018

What's Ahead For Mortgage Rates This Week - October 29th, 2018Last week’s economic news included readings on sales of new homes and pending home sales. A reading on consumer sentiment was also released along with weekly reports on mortgage rates and new jobless claims.

Sales of New Homes Slide to Near 2 – Year Low

According to Commerce Department readings on new home sales, the pace of sales slipped close to a two-year low in September; new homes sold at a seasonally-adjusted annual pace of 553,000 sales.

September’s reading was 5.50 percent lower than for August and was 13.20 percent lower year-over-year. Analysts expected a reading of 620,000 sales; August’s reading showed an annual pace of 585,000 new homes sold.

Real estate pros reported a 7.10-month supply of available homes, which was a six-year high. A six-month supply of homes for sale is considered a normal inventory in many markets.

Home prices had a median of $320,000 in September, which was 3.50 percent lower year-over-year. Strong demand for homes coupled with limited supplies have caused home prices to rise and buyers to compete with cash-buyers and ever escalating home prices. Rising mortgage rates and few choices of available homes have sidelined moderate and first-time buyers.

Pending Home Sales Rise in September

The National Association of Realtors® reported rising pending home sales, which provided hope for lagging home sales. Pending sales are sales for which a purchase contract is signed but the sale has not yet closed. Pending home sales had an index reading of 104.6 in September as compared to 104.1 in August. No change from August’s reading was expected in September. The pending sales index pending home sales index was one percent lower year-over-year.

Pending sales rose 4.40 percent in the West; The Midwest posted a gain of 1.20 percent and the South posted a negative reading of – 0.40 percent. The South posted a negative reading of -1.40 percent in pending home sales.

Pending home sales are considered a predictor of completed sales and new mortgages.

Mortgage Rates, New Jobless Claims Rise

Freddie Mac reported higher average mortgage rates last week. Rates for a 30-year fixed rate mortgage rose one basis point to 4.86 percent; the average rate for a 15-year fixed rate mortgage rose three basis points to 4.29 percent and the average rate for 5/1 adjustable rate mortgages was four basis points higher at 4.14 percent. Discount points averaged 0.50 percent for 30-year fixed rate mortgages, 0.40 percent for 15-year fixed rate mortgages and 0.30 percent for 5/1 adjustable rate mortgages.

First-time jobless claims rose last week to 215,000 new claims filed. Analysts expected no change from the prior week’s reading of 210,000 new claims filed. The University of Michigan reported a dip in its consumer sentiment index for October. September’s reading was adjusted from and index reading of 99 to 100.1. October’s reading was 99.  Lower consumer sentiment was based on stagnant wage growth according to analysts.

Whats Ahead

This week’s scheduled economic news includes readings from Case-Shiller on home prices, Labor sector reports on private and public sector employment and the national unemployment rate.

What’s Ahead For Mortgage Rates This Week – September 10th, 2018

What’s Ahead For Mortgage Rates This Week – September 10th, 2018Last week’s economic news included readings on construction spending, along with public and private-sector jobs growth. The national unemployment rate, weekly reports on mortgage rates and new jobless claims were also released.

Construction Spending Rises in July

July construction spending ticked up to 0.10 percent from June’s negative reading of -0.80 percent. Year-over-year, construction spending was 5.80 percent higher than for July 2017.Public-sector construction accounted for most of the growth and increased by 0.70 percent as private-sector construction projects decreased by -0.10 percent.

Month-to-month spending readings can be volatile, but analysts said that construction spending for the first seven months of 2018 were up 5.20 percent from the same period in 2017. July’s slower spending rate suggested that construction projects are slowing.

Given ongoing shortages of available homes, this is not good news for housing markets. High demand has driven home prices up, but affordability has become an issue in areas where home prices outpace inflation and wage growth.

Mortgage Rates Rise as New Jobless Claims Fall

Freddie Mac reported higher average mortgage rates last week; the rate for a 30-year fixed rate mortgage rose two basis points to 4.54 percent. Rates for 15-year fixed rate mortgages averaged 3.99 percent and were two basis points higher.

Rates for a 5/1 adjustable rate mortgage averaged eight basis points higher at 3.93 percent. Analysts said that home prices continued to rise as demand for homes softened Higher home prices and mortgage rates sidelined first-time and moderate-income home buyers as slim inventories of homes for sale sidelined buyers who could not find homes they wanted to buy.

First-time jobless claims were lower last week with 213,000 claims filed. Analysts expected 212,000 new claims to be filed based on the prior week’s reading of 213,000 first-time filings. The national unemployment rate held steady at 3.90 percent.

ADP payrolls dropped to 163,000 private-sector jobs in August as compared to 217,000 private-sector jobs added in July. The Commerce Department’s Non-Farm Payrolls reported 201,000 public and private-sector jobs added in August, which fell short of the expected reading of 212,000 jobs added and the prior month’s reading of 213,000 jobs added.

Whats Ahead

This week’s economic readings include reports on inflation, retail sales and the Federal Reserve’s Beige Book report. Weekly readings on mortgage rates and new jobless claims will also be released.

What’s Ahead For Mortgage Rates This Week – July 9th, 2018

What’s Ahead For Mortgage Rates This Week – July 9th, 2018Last week’s economic releases included monthly readings on construction spending, public and private sector job growth and June’s national unemployment rate. Weekly readings included Freddie Mac mortgage rates and new jobless claims.

Construction Spending Rises in May

According to the Commerce, construction spending rose 0.40 percent in May; public sector construction spending rose 0.70 percent and private sector spending rose by 0.30 percent. Residential construction rose by o.80 percent, which analysts regarded as a good sign for the economy. Building more homes has long been identified as the only solution for persistent housing shortages that cause high demand for homes and rapidly rising home prices.

Analysts said that volatility and heavy revisions to government reporting, construction spending readings are subject to significant change. April’s reading of 1.90 percent growth was downwardly revised to 0.90 percent growth.

Mortgage Rates and New Jobless Claims Fall

Freddie Mac reported lower mortgage rates last week. Rates for a 30-year fixed rate mortgages were three basis points lower at an average of 4.52 percent. 15-year fixed rate mortgages averaged 3.99 percent and were five basis points lower than for the previous week. Rates for 5/1 adjustable rate mortgages averaged 3.74 percent and were 13 basis points lower than for the prior week.

First-time jobless claims fell last week to 231,000 new claims as compared to 200,000 new claims expected.and 244,000 new claims were filed in the prior week.

Unemployment ticks up as Public and Private Sector Job Growth Slows

ADP payrolls fell to 177,000 private sector jobs were added in June as compared to 189,000 jobs added in May. The Commerce Department reported 213,000 public and private sector jobs added in June, which beat expectations of 200,000 jobs added in June. 244,000 jobs were added in May.

The National unemployment grew to 4.0 percent in June as compared to May’s reading of 3.80 percent. Analysts attributed the rise in the unemployment rate to 600,000 new job seekers entering the market in June.

Whats Ahead

This week’s scheduled economic reports include readings on inflation, core inflation and consumer sentiment. Weekly readings on mortgage rates and new jobless claims will also be released.

5 Key Factors That Affect Your Mortgage Rate

5 Key Factors That Affect Your Mortgage RateMany first time home buyers often wonder what factors determine their mortgage rate. Is it their credit score? Is it the type of loan chosen? Is it the size of the loan?

The truth is, there are many factors at play. Mortgage interest rates are not standardized across the board, so they vary from lender to lender and from borrower to borrower.

Here are 5 common factors that determine or affect your mortgage interest rate:

1.    Default Risk

Risk is a key consideration when determining mortgage interest rates. Banks and other lenders are in a risky business because there is always a chance of a borrower defaulting on their loan repayments. This is known as default risk.

Banks and lenders therefore charge riskier borrowers higher interest rates to discourage them from borrowing, as well as to be able to average their returns between risky and non-risky borrowers. Risk is one of the prime factors that influence your mortgage rate.

2.    Credit Score

Perhaps you are wondering how banks and other lenders determine if you are a risky or non-risky borrower. There are many tools they can use, but your credit score plays a big role. You credit score is based on the borrowing history in your credit report, which summarizes all details about your credit card balances and timely bill repayment.

If you pay your bills on time and sustain relatively low credit scores, your credit score stays high and lenders view you as a low-risk borrower. Consequently, your mortgage interest rates tend to be lower than a person with a low credit score.

3.    Type of Property You Are Purchasing

Some properties have a higher risk of default compared to others. This is determined by analyzing the historical likelihood of default on different properties; lenders use this analysis as the reason to charge higher mortgage interest rates on riskier ones.

For example, vacation homes tend to have a higher rate of default compared to single-family homes and lenders charge higher rates for such homes.

4.    Size of Down Payment

The amount of money you pay upfront on the mortgage also influences its interest rate. A large down payment gives you a lower LTV ratio (loan-to-value), which also decreases the level of risk borne by a lender. A small down payment, on the other hand, gives you a high LTV ratio and thus a higher mortgage interest rate.

5.    Loan Amount

A large loan bears a higher risk than a smaller one simply because there is more money at risk. Most lenders therefore charge higher interest rates on large property loans as compared to smaller ones.

All in all, different lenders offer different rates depending on their style of operation, appetite for risk, or competitiveness in the market. It’s important to search intensively for offers from different lenders for the best mortgage rate.

Contact us to help you find out more about mortgage rates and what that means for your next home purchase.