How Are Mortgage Interest Rates Set By Lenders? – Fortune Recommends

How Are Mortgage Interest Rates Set By Lenders? – Fortune Recommends

November 09, 2022

Interest rates go up amid such conditions because lenders also need to make money, adds Jeffrey Taylor, member of the board of directors of the Mortgage Bankers Association (MBA). “As the purchasing power of the dollar is eroded, mortgage lenders have to increase interest rates to ensure their interest returns a profit, or at this moment in time, a break even action.”

Beyond the issues already mentioned, there’s a handful of other economic and market realities that may influence the mortgage interest rates that are available at any given time, says Taylor.
Some of these additional factors include the rate of economic growth, the bond market and overall housing market conditions—meaning the available supply of homes for sale and the demand to purchase those homes.

“Each one on their own has impacts on the housing market and together—if one or more are off—it can have a compounded effect,” explains Taylor.

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