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What Causes Mortgage Rates To Fluctuate?

By Eric Goodwill

If you are buying a new home, one of the things that you should think about is the interest rate. The interest will determine if you will be able to afford the home or not. Most people assume that mortgage rates fluctuate as a result of the decisions that are made by the federal government but this is not always the case. There are various factors which can cause them to fluctuate. It is important to know the rate at which you are purchasing a mortgage before you sign any documents.

government decisions

The decisions that the government makes have a great impact on the mortgage rates. The government is always trying to ensure that it is easy for people to purchase homes. This is why it invests a lot of funds in companies which offer mortgages to make sure the rates remain low. If the government was not putting any funds into these companies, it would result in an increase in the rates.

The economy

The condition of the economy will also determine the mortgage rates. Government rates affect these rates indirectly. If the economy is doing well, rates have to be raised to prevent inflation and when it not performing well, the rates have to be decreased to encourage buying and borrowing. This means that the rates will fluctuate depending on how the economy is performing.

Mortgage Demand

The rates can also fluctuate as a result of the demand in the market. If there is a high demand for mortgages, the rates will increase and when there is a greater supply, the rates will decrease.

Effect of bond prices on mortgage rates

The rates can also fluctuate because of bond prices. When these prices are high, the rates decrease and when they are low, the rates increase.

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1. What Causes Home Mortgage Interest Rates To Fluctuate?
2. Why Do Mortgage Rates Fluctuate?
3. What Are The Best indicators For Future Mortgage Interest Rates?
4. Will Mortgage Rates Drop Again?
5. When Do Home Mortgage Interest Rates Fluctuate The Most?