Mortgage Rates and How They Fluctuate

Here at Mortgage Moon, we understand that as a first-time homebuyer, it can be confusing trying to understand all the terms associated with a mortgage. As your Laguna Niguel mortgage lender, our team of experts have created an explanation below on what mortgage rates are and how they can change overtime.

Mortgage Rates

A mortgage rate is the percentage of interest charged on a home loan. This rate can be determined by your lender. As the borrower, you can choose between one or two types of rates to pay towards your mortgage: An adjustable rate mortgage or a fixed rate mortgage. An adjustable rate mortgage (ARM) is where your rate can change throughout the duration of your loan. This typically has lower initial rates than a fixed rate mortgage. A fixed rate is where your rate per month is set and will never change. This is a great option if you wish to budget accurately and know exactly how much you owe towards your loan, and how long it will take you to pay it off.

What Affects Mortgage Rates

If you are in the market for a Laguna Niguel mortgage, it is important to understand how mortgage rates fluctuate. Mortgage rates can change by a few different factors:

1. Economy:

There is a direct relationship between economic growth and interest rate fluctuation. This means that if the economy is doing well then interest rates are likely to increase. If the economy is doing poorly then lenders will decrease their rates.

2. Past Rates:

A lender will compare past and current rates in order to predict where the market will head in the future. Analyzing these rates can help forecast if there will be any inflation in the economy. Depending on their predictions, lenders will adjust their rates accordingly.

3. Government Policy

If the government chooses to change the supply of money, then inflation can occur. The federal reserve controls how much money they put into the market, which is dependent on how much inflation there is. If the interest rates are too high, more money can be put into the market to help adjust these rates.

4. Residential Market

Depending on how well the residential market is doing can also affect the demand for a mortgage in Laguna Niguel. If homes are selling at an increased rate, then there will be a higher demand for home loans and construction loans. This will cause lenders to increase their rates due to the increase in demand.

Many factors contribute to the rise and fall of mortgage rates. For more information, please contact your local Laguna Niguel mortgage lender. Here at Mortgage Moon, we would love to work with you and help finance your new home. So don’t wait, call our office today to get started 800-385-7590.