How Are Mortgage Rates Set?

Next Video:
How to Negotiate Low Mortgage Interest Rates....5

Mortgage rates are set by the government, who provides the lending money to the banks, and rates are often directly related to the state of the economy. Find out how loan rates are set with advice from an experienced mortgage broker in this free video on personal finance.

Part of the Video Series: Mortgage Information
Promoted By Zergnet


Video Transcript

Hi, my name is Matt McKillen, I'm with Innovative Financial Group. The question posed to me today was how are mortgage rates set? The answer to this question basically is from a variety of ways the banks acquire funds to lend to the consumer. Right now the federal government has really lowered the fed rate to banks to borrow money which in turn is creating a very, very low mortgage rate arena for us in the lending business right now. Another thing that ties into why rates are low is the 10 year treasuries. The 10 year treasury yields which you can find as a index on the stock market generally determines which way mortgage rates are moving whether they're up or down. As sad as this sounds, rates generally tend to drop as the economy is doing worse. It's basically trying to stimulate growth and purchasing and building equity in the country. So the rates are generally set by what it's costing the bank to borrow the money to lend to you and then there are a few other economic data reports that can also affect the rates in the short and the long term. Thank you for asking, my name is Matt McKillen, I'm with Innovative Financial Group.


Related Searches

Is DIY in your DNA? Become part of our maker community.
Submit Your Work!