Discover how home loan interest rates are set and how you can get the lowest rate on your next mortgage or refi.

Interest rates for home loans greatly influence how much homebuyers who finance their purchase can afford. You probably already know that when rates go down buyers can afford more; when they go up buying power is limited. But do you know how mortgage rates are determined? And how you might get the lowest rates? Keep reading to get answers.

What drives mortgage interest rates?

Several factors come into play to determine interest rates for home loans.

A primary factor is the federal funds rate set by the Federal Reserve; this is the interest rate banks pay to borrow funds from other banks short-term.

Economic factors like inflation, the rate of job creation and supply and demand also influence mortgage interest rates.

How often do mortgage interest rates change?

Like other financial products, rates for home loans change daily (on weekdays and excluding holidays), and sometimes several times in a day. The fluctuations are due to trading activity on the mortgage bond markets. Traders constantly consider the economic factors mentioned above and this affects the price of borrowing money with a home loan.

You can see the latest rates on Consumers home loans here. Our rates are updated daily.

Are there things buyers can do to get a lower interest rate?

Those with the highest credit score have access to the lowest rates for home loans. When you’re preparing to buy a home, get your credit score as healthy as possible.

Typically, those with scores of 760 and higher will qualify for the lowest mortgage rates. If your score is below 760, you can still qualify for a mortgage. In fact, lenders will loan to borrowers with a credit score as low as 620.

When choosing a mortgage, an adjustable rate mortgage (ARM) offers an initial rate that’s lower than a traditional 30-year mortgage but is adjusted up or down in accordance with a schedule that’s detailed in the home loan contract. Often, people who plan to move or anticipate access to greater income before the introductory rate expires choose ARMs.

If you have questions about mortgages for a home, condominium new construction project—or refinancing—call us 800-991-2221. Or get in touch online with one of our Mortgage Loan Officers (find each officer’s phone and email address on their profile page by clicking on “More info”).”

 

All loans subject to approval. Rates, terms, and conditions are subject to change and may vary based on credit worthiness, qualifications, and collateral conditions. Federally Insured by NCUA