Mortgage interest rates are derived from a variety of different factors and economic news and generally change throughout the day. Usually a 15 year mortgage term will have a lower interest rate than a 20 year mortgage and the 20 year mortgage will have a better rate than a 30 year mortgage.The Feds Rate is one of the primary ones that the FOMC uses to influence interest rates and the economy. Fluctuations in the Feds rate have a broad effect by influencing the borrowing cost of banks in the lending market, and the returns offered on bank products like COD's, savings accounts, and money market accounts. Changes in the Feds rate and the Discount Rate also effect changes in the Prime Rate. The prime rate is the index used for many credit cards, HELOC'S, and personal loans. Many small business loans are also tied to the Prime rate. The 11th District Cost of Funds is often used as an index for adjustable rate mortgages. There are many other indexes to take into consideration as well, and each of them can have an effect on your mortgage rate, if your rate happens to be tied to that index.
Despite common perception, mortgage rates are not directly tied to the prime interest rate, which is the rate you see commonly being affected by the FED. (Alan Greenspan).
In most cases, the interest rates of a Hybrid mortgage or an Adjustable Rate Mortgage (ARM) are lower than that of a Fixed Rate Mortgage (FRM). This is the banks' way of rewarding borrowers who are willing to take on some of the risks of an ever moving interest environment.
Most lenders update their rates every day. A broker is not limited to the small number of programs normally available from a specific lender. A broker will usually offer you more competitive rates.
Mortgage interest rates will vary from lender to lender. They also will vary depending on the borrower's credit history and the collateral being used to secure the loan.
Mortgage rates can vary depending on the percentage of the home's value that you wish to borrow. For example, if you put 20% down on a purchase, your rate will be better than if you put 5% down.
Mortgage brokers generally get the same mortgage rates since they all have access to the same lenders. However, if you go to one mortgage broker on one day and another mortgage broker on the next day, you may be quoted different rates because mortgage rates can change daily.
Mortgage rates vary depending on your credit score. If your credit score is less than average, you will not be able to get the lowest rate available to people with excellent credit scores.
