A big part of when you decide to buy and which lender you choose to finance with will likely depend on how mortgage rates are doing. Your mortgage rate not only affects the amount of interest you will pay over the life of your mortgage, but it can also influence the amount you are approved to finance, as well as your affordability of homeownership overall.
So how are mortgage rates determined? And why do they change?
Who Determines My Mortgage Rate?
Your mortgage lender will determine if you are approved for a loan and on what terms, but mortgage interest rates are largely determined by the secondary market. This secondary market is where mortgages are bought and sold.
Mortgage investors, like Fannie Mae and Freddie Mac, buy loans from mortgage lenders and sell them to Wall Street, mutual funds, and other financial investors who then trade them like securities and bonds. The actions of these secondary market financial investors collectively determine the interest rate on your loan.
What Influences Mortgages Rates?