Historically, mortgage rates were impacted by World War II, the oil embargo in the 1970s and 1980s, the 2007 housing market crash, and Brexit.
4. Bond prices
As bond prices go up, mortgage rates go down. And if bond prices go down, mortgage rates will increase. Ten-year Treasury rates also impact lenders’ interest rate, with mortgage rates rising or falling depending on demand.
Generally, when Americans are feeling spooked by the economy, they invest more in bonds. Because yields are considered safer assets, yields will go down. If Americans are feeling more positive, they will invest more money in stocks. While stocks tend to offer a higher rate of return, they also pose a greater risk of loss.
5. Property type
Lenders typically judge mortgage rates on your physical attachment to a property, not just on your financial investment. If a property is your primary residence, for instance, you are more likely to prioritize your monthly payments there, even if you get into trouble financially. Payments on your vacation or investment property may be less of a priority. In other words, some home loans come with a higher risk for lenders and, therefore, they charge a higher mortgage rate.
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