Question

explain clearly the determinants of a mortgage interest rates

Answer 1

There are various factors which determine the mortgage interest rate. Firstly the credit score of a person or a business is taken into account. Customers with higher credit scores get a lower interest rate and vice versa.

The location of the house also impacts the interest rates. The price of the homes and the loan amount also determine the interest rates. In particular a small amount will have a smaller rate because it Carries a smaller risk for the lender. A larger down payment also attracts a lower interest rate because it reduces the risk. Similarly the duration of the loan impacts the interest rate directly. A high duration attracts of higher rate because of the higher risk involved. The interest type may be fixed or adjustable. The rates may be lower with an adjustable rate loan rather than a fixed-rate loan.