Ratebuzz
What Is a Mortgage Rate?
A mortgage rate is the percentage of interest that is charged for a home loan. Mortgage rates change with the economic conditions that prevail. However, the mortgage rate that a home buyer is offered is determined by the lender and depends on the individual’s credit history and financial circumstances, among other factors.
How your lender sets your interest rate
Lenders set the interest rate for your mortgage. They consider factors to help them determine your cost.
These factors can include:
- the length of your mortgage term
- their current prime and posted interest rate
- if you qualify for a discounted interest rate
- the type of interest you choose (fixed, variable or a combination)
- your credit history
- if you’re self-employed
Market Factors impacting mortgage interest rates
- The economy
- Inflation
- Financial markets
- Government policies
- Federal
