When it comes to purchasing a home, many people take for granted that property prices fluctuate from week to week, however, if you’re not careful with your mortgage rates and keep them in mind daily, the cost of closing on a home can quickly add up.
Unless you’re in an area where prices are depressed or have a trust fund waiting to be spent on a dream home, most homeowners will have to budget for the closing costs associated with their new mortgage.
However, staying current with mortgage rates and what they mean for your monthly payment is not only important but also easy to do. Here we show you everything you need to know about tracking mortgage rates and how this impacts your wallet.
What Is Mortgage Rates?
Mortgage rates are the interest rates charged by banks for mortgages on real estate securities, also known as mortgage-backed securities, these securities are bought by investors and insured by the government against default.
While current mortgage rates calgary can vary significantly from week to week, they generally move in tandem with benchmark rates, which in turn move in tandem with the cost of borrowing money.
Why Is It Important To Stay Up To Date On Mortgage Rates?
Mortgage rates are one of the foremost factors influencing the amount you’ll pay for a house because of this, it’s important to know what the going rate is, and more specifically, what impact it has on the price of your house.
Mortgage rates can move significantly from week to week, and, unfortunately, they have a tendency to spike in the few days leading up to the purchase of a new home. At the same time, interest rates are also affected by other factors, such as the health of the economy and the overall supply and demand of mortgage securities, these factors can cause mortgage rates to move up or down.
How To Track Mortgage Rates
Mortgage rates are tracked on multiple websites and through your local bank and if you bank at a bank that offers this service, then log in and check the rates every single day. If you bank at a different bank or do not use this information, then call the bank and ask them how to stay up to date on mortgage rates.
Which MBS Tracks Which Mortgage Rates?
Some mortgage-backed securities are linked to the interest rate on the U.S. 10-year government note, these securities are typically backed by a special kind of insurance called credit default swaps.
Credit default swaps are a kind of insurance that protects the owner of a bond against the risk of default, the owner of the bond agrees to pay a fixed amount to the credit default swap company in the case of default.
The credit default swap market is one of the few places where mortgage rate changes can be immediately reflected in the market. To ensure accurate pricing, the average of 20 data points is used to determine the interest rate on the security. If any of these data points change, then the security itself also changes.
Mortice rate change can dramatically impact your home financing cost, it is important to stay up to date on mortgage rates and see if there are any increases or decreases, this can help you plan for potential changes in the future and make sure that you take advantage of any rate reductions.