Factors That Affect Mortgage Interest Rates
3 minute read
February 13, 2019


As you’re buying a new home and looking for a good interest rate for your mortgage loan, you may wonder why you’re seeing different rates every time you come back to check. Interest rates for the mortgage loan can be unpredictable as they are volatile. This means that they can significantly drop or surge up in a short period of time. You will notice that mortgage interest rates drop around the same time that the stock market declines, and vice versa.

Having said that, interest rates and the stock market do not directly affect each other. Rather, there are a couple of other factors that explain the fluctuation of mortgage interest rates. The change could be due to your personal and financial information or it could be because of other economic factors. This article will address a few of the factors that cause interest rates to fluctuate:

Your Credit Score

Your credit score is considered a personal factor that plays a part in determining your mortgage interest rate. This is because your lender has to be sure that you are able to repay the loan back consistently. Thus, they base the interest rates they offer you on your credit score. For example, if your credit score is quite high, your lender will believe that you’re reliable enough to pay back the loan in time. Therefore, they will give you a lower interest rate. If you have a bad credit history and your credit score is less than acceptable, however, it is likely that you will get a higher interest rate. For this reason, you should make sure that your credit score is always at a decent level. You can start by paying your bills on time in a consistent manner to improve your score.


The Consumer Price Index (CPI) is an inflation measure that looks at the price change for goods and services. It is calculated by averaging the price changes for an item of goods and services. The CPI can be used to evaluate price changes that are related to the cost of living. When inflation is high, it also causes the prices of products, services, and everything else including home loans to increase as well. On the other hand, when inflation is low, mortgage rates will also drop.

Final Notes

As you can see, interest rates can go up and down fairly quickly due to reasons that are beyond your control. Therefore, if you’re ready to buy a house, lock in your rate while the rates are still low. This way, your locked rate will stay the same while you’re still hunting for your home – regardless of the surge in interest rates. Keep in mind that this rate will only stay for a specified period of time, so you should discuss with your lender to ensure that you know how long you have until the rate lock expires. The topic of mortgage interest rates is complex and difficult to keep up with. Therefore, you should always consult with your loan officer for further information that is better suited for your situation.

The Aceland Mortgage provides mortgages in New Jersey that are fair & affordable. Get in touch today to see how we can help!

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