As with any loan, borrowers are always looking at getting money at a good interest rate, and lenders have to balance risk and the cost of doing business. It is a well-known fact that only a few borrowers get the lowest mortgage rates in Utah or elsewhere, as they have the best finances and impeccable credit scores. That said, even though it is a known fact that the overall financial health of borrowers determines the rates they get, there are other factors which determine the overall market rate.
Factors Which Impact Interest Rates:
Inflation plays a key role not just in the overall economy but also on interest rates. This is because demand is higher than supply. Lenders have to keep interest rates at a level which enables them to manage the erosion in purchasing power and also make money by lending. Most lenders watch inflation rates and adjust their loan rates accordingly. Regardless of whether one applies for a mortgage in Utah or elsewhere, interest rates will also vary slightly in a local market.
Growth Level of the Economy
GDP and the rate of employment play a key role. Higher incomes and good consumer spending also drive rates higher. This is because there is a limited supply of money and lenders have to charge accordingly.
Federal Reserve Policy
This is another factor which plays an important role in setting mortgage rates in Utah and the rest of the country. Higher money supply depresses interest rates, and the reverse is true too.
The housing market has its ups and downs too – if there are very few homes being built or put up for sale, demand for mortgages will fall and drag down interest rates. Another factor dragging down interest rates is the fact that more people are renting instead of buying.
All of these and other factors do play an important role in determining mortgage interest rates. A well-informed borrower will be able to take advantage of the best rates, at the right time.