Many of you have questions about what really affects Mortgage Interest Rates. I don’t have a crystal ball that can answer your questions but what I do have is information about some of the underlying fundamental indicators that determine the general direction of mortgage interest rates.
Many people are surprised to learn that what the Fed does with the prime rate has less of an effect on Mortgage interest rates. Contrary to popular belief, the prime rate sets the tone for rates on business borrowings and consumer accounts. More often than not, Mortgage rates have anticipated what the Fed will do and have already factored in a corresponding move, be it up or down. Only if the market is wrong in their estimate will rates change with a Fed move.
So what would affect mortgage rates?