Some Of The Most Important Factors Affecting Mortgage Rates, Mesa, AZ

December 14, 2021

Some Of The Most Important Factors Affecting Mortgage Rates, Mesa, AZ

By Published On: December 14th, 2021Categories: Mesa AZ, Mortgage Broker, Mortgage Company, Mortgage Rates

Several factors affect mortgage rates in Mesa, AZ. However, industry leaders consider these four as the most important among them. These variables move the mortgage market more than the rest. The dynamics they bring into the market create a significant impact on mortgage applications and, thus, it makes sense to watch out for them.

#1: INFLATION

Why does inflation affect mortgage rates? Because it devalues our money. When the inflation is significantly higher than the previous one, you expect that there is also a significant movement in mortgage rates. Inflation devalues everything denominated in U.S. dollars, including mortgage-backed bonds. When the inflation rate is substantially higher than estimates, the demand for MBS starts to fall.

#2: ECONOMIC GROWTH

Economic growth is also an essential indicator that affects mortgage rates. Keep an eye on items like gross domestic product (GDP), employment rate. When the economy is doing well (as reflected in GDP), expect higher wages. And the more money earned, expect an increase in consumer spending, including consumers looking for mortgage loans for home purchases. The law of supply and demand comes into play – an upswing in the number of mortgage applications can push mortgage rates, Mesa, AZ, higher.

#3: THE BOND MARKET PERFORMANCE

The overall condition of the larger bond market indirectly affects how mortgage companies charge for mortgages. One commonly used government-bond benchmark – to which mortgage lenders often set their interest rates – is the 10-year Treasury bond yields. Generally, mortgage-backed securities sellers must offer higher. The reason is that repayment is not 100% guaranteed – unlike government bonds. (your mortgage broker should be able to explain to you more about this one.)

#4: FEDERAL RESERVE MONETARY POLICY

The monetary policy by the Federal Reserve Bank is another crucial factor that can influence both the economy in general and interest rates, which includes mortgage rates. Yes, indeed, the Federal Reserve does not set the specific interest rates in the mortgage market. However, when they establish the Fed Funds rate, they affect interest rates. When we see an increase in the money supply, expect higher mortgage rates. On the other side of the coin, when they are tightening the money supply, it pushes rates upward.

Online looking for a trusted mortgage company to help you find the best deals on mortgage rates, Mesa, AZ? Contact HomePlus today at (800) 958-7587.