If you had started your search for a mortgage a while ago, you might have noticed that the rates keep changing. But why does the mortgage rate in Utah go high and decrease unsteadily? And, can they ever get reliable? How can you determine the trend they will take in the future?
Mortgage lenders such as City Creek Mortgage package the loans with their respective securities before selling off to investors. The lender is entirely responsible for servicing the loan. The bondholder should, however, have a guarantee that the investment in the bonds will be worth it.
How Bonds Affect Rates?
The regularity of the buying and selling of bonds affect the mortgage rates. When there is a massive sale of bonds, the loan rates dip and then rise when there is a low demand for mortgage bonds.
What Affects Demand in the Bond Market?
The main events here are social, political, and economic forces, which affect the stock market. When there is uncertainty in these three areas, investors find other ways to invest their money such as in bonds. When there are more sales of bonds, yields decrease hence the rates drop.
When the stock market is promising, investors sell off their bonds and mortgage rates to increase.
In some cases, the government intervenes in issues affect bond market, hence influencing inflation. The Federal Reserve controls the supply of money around the country and dictates the borrowing rates. The government will buy off more bond markets to lower the loan rates, and hence encourage more people to acquire homes.
So far, you can tell the factors that affect the rise and fall of the mortgage rate in Utah. While these rates affect the market trends, mortgage rates are not a one-size-fits-all; they will depend on the type and amount you are borrowing.
Also, note that individual borrower rates depend on your credit score, income, type of property, and security for the loan.