How are mortgage rates determined?

I understand that there are a number of factors that influence the rate; however, are the rates determined purely by market forces such as a stock price, or is there a board who actually sets the rates?How are mortgage rates determined?
the govt interest rate they charge to banks is the major factor.


supply and demand is the other.How are mortgage rates determined?
The true source of mortgage rates, is the mortgage backed securities market (mortgage bonds). Fannie Mae issues the most heavily traded mortgage bonds, and typically they are the ones to watch. The market forces actually drive the price of the mortgage bonds up and down, which in turn drives rates.

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what the market will bear is a factor. if the rate is 8% and no one is getting loans, the rate comes down.
Rates are determined primarily by market forces. There is no board that sets rates.





Market forces set the rates for a certain types of mortgages, but where you fit in on the spectrum depends on your personal situation. If you are trying to borrow 100% of the value on a $500,000 house is different than borrowing 50% of a $250,000. That is related to pricing risk and different lenders price those risks differently.





good luck!

the bees

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