Before deciding to have any mortgage loans, it is necessary for borrowers like you, to know the available loan rates present in the market, this way; you can be able to obtain the best mortgage interest that could be easily covered by your financial assets.
Mortgage loans are basically determined through the performance of Mortgage Backed Securities (MBS). These are those securities which are traded on the open stock market and are backed by assets, like real estate. MBS are used to promote securities to the investors on the open stock market when a consumer acquires for a home loan.
Mortgage Backed Securities are often merged and are long-tem, fixed-rate revenues. The movement of the MBS relies to the demands of the investors; the higher the investor demands for MBS, the lower the yield for investors. As follows, the higher the investor demands for MBS, the lower the yield they acquires, on the contrary if the demand for MBS decreases, the cost for MBS notes goes down allowing investors to earn more for their investment and mortgage interest rates go up.
Another mortgage determinant is the inflation factor around MBS, wherein as inflation rises, interest rates rise and the demand for MBS declines and as inflation goes down, interest rates decline and the demand for MBS increases. Mortgage interest rates are usually higher by five percent in commercial financing compared to real estate loan.
Generalizing these factors will give you the idea that there will be an upswing on mortgage interest when the Mortgage Backed Securities are falling-off and the mortgage interest will regress if the investor demand for MBS increases.
Additionally, your credit rating and payment history are also determinants of the interest, thus, obtaining an accurate copy of your credit report before applying for a mortgage will be useful, especially when MBS are in high demand, because you can avail lower interest rate if both are secured. You can have your credit report legally from major credit reporting agencies. US based credit agencies include – Equifax, TransUnion and Experian.
In totality, borrowers can determine mortgage interests and be able to have the best interest available in the market through; being aware of the Mortgage Backed Securities (MBS) movement in the stock market and through procurement of their personal credit rating and payment reports.
By Martin Fisher