Mortgage Rate

One of the key considerations when negotiating a mortgage is the mortgage rate.

Mortgage rates may rise and fall in line with interest rates, but they are influenced by several other factors. To find out more we would recommend that you visit the Free Mortgage Advice web site, from which the following is an extract:

"Mortgage rates are affected by many factors, because of which they change frequently. A significant matter influencing mortgage rates is the issue of inflation. This occurs when credit is relatively easy to obtain, and demand for goods and services is high, stimulating an increase in prices. A boom period such as this can result in rapidly rising prices, including house price inflation, and the economy may be in danger of overheating. Mortgage rates may rise in sympathy with other inflationary pressures. Some people take on more than they can properly afford believing, that the upward cycle will continue forever, and may be caught unawares when the bubble bursts.

Although mortgage rates tend to follow the direction of interest rates, there are also various other issues that determine them. Mortgage rates are associated with the supply and demand for home loans in what is a competitive market. A variety of loan providers offer many different deals, so mortgage rates may differ, according to what has been negotiated.

At times when mortgage rates are relatively high, demand for mortgages slows down. To counter this, the Federal Reserve Bureau may adjust interest rates. So mortgage rates are linked to the rise and fall of interest rates, but as shown above, there are other factors to take into consideration.

Banks and other loan providers obviously need to plan ahead. They may be geared to providing a particular quota of mortgages in a given period. In a competitive market they may need to adjust mortgage rates downwards, for some deals, to achieve their planned objectives. Although the demand for mortgages may remain high, some mortgage rates might be lowered to meet particular business objectives."

Please Click Here to visit the Free Mortgage Advice Web Site.

Tags:

No comments: