Mortgage Rates – Why Mortgage Rates Fluctuate

Mortgage rates are the rates at which banks lend their customers money to buy homes and real estate. They determine these interest rates based on the rate at which they can borrow money – mainly from the Reserve Bank. This set is often referred to as a repo set.

Although you may think that fluctuating mortgages are a bad thing given the recent credit crunch, fluctuations can be used to your advantage.

Choosing the right type of mortgage loan can actually save you thousands as mortgage rates change. For example, when interest rates are low, that’s the best time to apply for a fixed-rate loan. With a fixed rate loan, your repayments are fixed for a period of time – a few years or even the entire loan term, and then when mortgage rates rise, your payments remain stable. This is a great type of loan that you can also use on a budget because you always know what your repayment is.

An adjustable rate loan has variable repayments that fluctuate as interest rates change. If mortgage interest rates are high at the time of borrowing, this is the best type of loan to apply for. This means that if interest rates go down, mortgage rates go down and your repayments go down, giving you a little extra cash in your budget.

But whether you choose a fixed or variable rate loan, be sure to shop around for the best mortgage rates. There are tons of companies that all want your business and to be competitive they offer the best mortgage deals.

One of the best ways to look around is to use a mortgage loan broker. A broker will get you a range of quotes for the best mortgage rates and can also answer any questions you may have about your mortgage loan.

Your credit rating also changes the mortgage deals offered to you, so it’s also a good idea to know your credit score and try to improve your score as much as possible before applying for a loan. Good credit bureaus often offer a credit monitoring service. Better mortgage rates are easier with good credit.

But whether you’re looking for a fixed or variable rate loan, be sure to check out the cheapest mortgage deals. Cheaper mortgage rates could save you thousands in the long run.