Interest Rate Influences: What Home Buyers Need to Know

Scattered interest rate and question mark cards

Buying a home can be a stomach-churning process if you’re watching and waiting for interest rate changes. Odds are you’re fretting over nothing.

While mortgage interest rates rise and fall for a variety of reasons (more on that below), they generally don’t move much. And even then it’s not likely to matter much in the long-run: a quarter-point change isn’t likely to alter the monthly payment on your mortgage by more than $20-$30, at the most.

“The right time to buy a home or condo is when you’ve found a good property in a good neighborhood where prices are on the rise. If you’re planning to be there for at least five years, make the move and don’t look back,” says Jonathan Payne, American Financing’s Director of Operations.

You also have more control than you might think. A top lender will give you options on the rate, the deadline, and the closing costs. Make sure you can realistically afford the deal before moving forward. Once you lock, the rate you choose is good for up to 60 days.

6 Things That Influence Mortgage Interest Rates

When should you lock? There’s no hard science to the process, but there are guidelines you can follow. Here's a closer look at what can influence changes in any given week:

Mortgage Rates Influences Chart

Generally, bad news and uncertainty is good for mortgage interest rates. Investors tend to flock to bonds in bad times, and more demand pushes interest rates lower.

Something to keep top of mind: the Federal Reserve (Fed) influences the rate of bonds to which mortgage interest rates are tied. So, the market anticipates what the Fed will do and prices rates accordingly. Interest rates remain at historic lows. And, Payne says current pricing assumes rates will rise a few more times in 2017. If you’re in the market for a property, plan to lock as soon as is reasonable.