Mortgage Made Easy for All

There are many factors that influence and regulate mortgage rates

, a basic knowledge about these deciding and highly volatile factors are vital to getting a good deal when shopping for mortgage loans. Many borrowers are inclined to think that lenders are solely responsible for the rising and falling rates, but in effect, it is investors in the secondary market that is responsible for pegging at whatever rates obtains. This factors, since it is not decided by a single front can only be predicted or forecasted.

In an attempt to break the whole process down, after you have met the pre-requisite conditions, a lender a bank or any type of financial institution, provides you the borrower, with money to buy your property. This money is then transferred to the account of the seller of the property. When the deal is done, the lender, by law has two options:

Keep the loan in its portfolio

Sale it on the secondary market

By keeping the loan, the lender is rewarded, over time, by the interest that you, the borrower pay on a regular basis until the maturity of it. Selling the loan circulates, sustains and provides immediate funds that are henceforth used to create financing options for other property investors.

So, in essence it is the activities of secondary market investors that are responsible for the mortgage rates that obtain today. Secondary market investors include:

Insurance companies

Pension fund providers

Securities dealers, etc

Government chattered bodies such as Freddie Mac, Fannie Mae, are also strong investors. By buying and retailing (mortgage buy backs), they facilitate and have substantive control of high-liquid mortgage investments.

The activities of these investors affect the rates in the sense that in attempt to earn the highest possible returns on their investments, they rely on the current and forecasted condition of the economic conditions. If the conditions are favourable, they expect the future returns to be higher than current ones and do not buy mortgages until this holds. Lenders expect to make reasonable profit too and this excites the mortgage rates. Lenders cannot sell off their loans for less than expected returns. When the conditions are not so favourable, investors buy whatever to avoid lower profits and this lowers the rates.

Mortgage Made Easy for All

By: Chris

POST COMMENT

Before You Choose Your Mortgage Rates Buy to Let Mortgage Rates – Is Cheap Really Cheap? The Basics of Commercial Mortgages How To Use A Current Account Mortgage Good Mortgage Broker vs. Bad Mortgage Broker Mortgage Cycling Secrets Revealed Second Mortgages – Home Equity FAQ Home Equity Mortgage – Your home can really save? Home Equity vs Refinance for a Second Mortgage How to find good Racine home mortgage lenders online? What you need to know for first Kenosha home mortgage? How to get the Best Mortgage Rates? Home Mortgages Refinance – How To Compate Lenders