Daily Mortgage Rates
Posted by Elizabeth Dennis on August 8, 2011 | No Comments
When purchasing a house either for the first time or for the fifth, one of the most important things to look at is the interest rate. Because interest rates change on a daily basis, it is important to keep up with the general trend and try to get the lowest rate you can. This is because even a difference of 2% can save you thousands of dollars over the life of the mortgage.
Daily mortgage rates are based on the simple concept that banks and other lending institutions make money when they loan you money. This is where the interest rate comes from. You are paying the bank back more money than they originally lent you so; they are making more in the end. However, your bank is also borrowing money, only they go to the federal government for funds. These loans are associated with the Federal interest rate which is otherwise known as the prime rate or the overnight borrowing rate. Because the bank is also borrowing money, they want to make more off of you than they owe, so the mortgage rate you get will always be higher than the prime rate.
There are many factors that go into determining the daily mortgage rate. Some of these include the return your bank or lending institution is making on short term investments, medium length investments such as treasury notes and long term investments and loans such as treasury bonds.
Currently, the daily mortgage rate for a 15 or 30-year fixed loan are some of the lowest they have ever been. This generally signals a point where it is a good time to buy a home. This is especially true if you lock in the low rate over the course of the loan and you will find yourself saving significant money when interest rates eventually go back up.
Tags: mortgage rates
Filed Under: Mortgage
