Mortgage interest rates are complicated, and trying to predict their movement is tough — Even for seasoned professionals. Changing economic conditions is one of the biggest elements, as is your personal financial history at the time you apply for a loan.

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Understanding mortgage rates.

The specific interest rate — along with fees — that you will pay for your mortgage primarily depends on two sets of conditions: Personal and economic.

Personal factors

Providing an accurate rate estimate is difficult because there are so many financial variables involved:

  • Income history
  • Current debt
  • Credit worthiness
  • Down payment
  • Property value

Also, in constantly changing economic times (like now), mortgage rates can fluctuate on a daily — even hourly — basis.

Economic factors

Although your financial health affects the individual interest rate you will be offered on a loan, economic factors and government monetary policy affect the whole mortgage rate universe. There are five major factors at work:

  • Inflation
  • The rate of economic growth
  • Federal Reserve monetary policy
  • The bond market
  • Housing market conditions

All of these factors reflect the fundamental rules of supply and demand. Some of them are complex, but a basic understanding of the underlying concepts will help explain the interest rates you are paying now and what could be coming in the future.

Mortgage rate analysis

For an in-depth review of the national mortgage rate picture — along with current economic conditions — visit the Federal Home Loan Mortgage Corporation (Freddie Mac) website directly and read their Primary Mortgage Market Survey (PMMS).

Mortgage rate quote

As noted above, interest rates are primarily affected by your overall financial health and income, so the best way to get a fairly accurate estimate is to answer a few simple questions.

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