What Moves Mortgage Rates?

April 29, 2011

in News

What Moves Mortgage Rates?

Mortgage rates may be at historic lows, but they’ve still jumped around somewhat in recent months, perplexing Americans mulling a home purchase this spring. It’s not always easy to pinpoint the cause of interest rate volatility, but much of it has to do with fickle capital markets, supply-and-demand dynamics, and even turmoil abroad. Outside investors play a key role in the mortgage marketplace, and demand for mortgage-backed securities heavily influences the direction of interest rates. When you take out a home loan from a bank, it’s unlikely that that same institution receives your payments. Instead, your loan is pooled with other mortgages – a process called securitization – to create mortgage-backed securities. Investors then buy mortgage-backed securities as part of their investment portfolio. If you’re getting serious about buying a home this spring, here are a few things besides your credit score that could impact the rate you get on your home loan. [Read this article]

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