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Economic Factors that can affect Mortgage Rates

Mortgage interest rates make up a more daunting figure for home buyers than the actual price of the property, since the latter is significantly affected by persisting rates. Federal and private mortgage lenders set their rates with a goal of managing risk, whereas, borrowers indisputably seek the lowest rates.

Income and financial status of borrowers affect the type of interest rate they can acquire, while many legal policies and economic factors impact the rates lenders offer. Listed below are the factors that largely affect mortgage rates in Canada.

The Market Conditions

The status of the housing market largely impacts mortgage rates. A decrease in new home purchases and sales causes a spiral in demand for mortgages and relieves pressure on the interest rates. A recent trend that displays a shift of consumers from buying to renting homes has also caused a significant decline in the housing market.

Growth of Economy

The well-being and growth of our economy are measured through the employment rate and Gross Domestic Product (GDP). Significant economic growth results in varying opportunities in numerous industries, giving employees the ability to earn and spend an increased amount of money on homes. The surge in home purchases also intensifies interest rates since lenders have limited resources.


Inflation deteriorates the purchasing power of a dollar and results in increased prices. Mortgage lenders precisely monitor interest levels and sustain them at a point, which is adequate enough to prevail over the altering power of dollar and results in estimated net profits.

Monetary Policy of Federal Reserve

The Federal Reserve does not determine the interest rates in the mortgage market, however, influences them by regulating money supply through fed funds. The monetary policy of the Federal Reserve Bank impacts the economy as well as the interest rates. Impediment of money supply results in heightened pressure on interest rates, while an increase in money supply eases pressure on interest rates.

The interest rates you receive are also dependent on your financial circumstances and history. The bank determines the price of the property you are aiming to acquire, the amount and consistency of your income, and credit history to determine if the level of risk that will be applied to your mortgage. In addition to your personal circumstances, the economic growth, inflation, and local state of the housing market significantly affect the interest rates.

Receive Assistance from Lending Experts

Since interest rates vary depending on numerous factors listed above, people need assistance in getting the best rates possible in their markets, especially if they are first time home buyers. Lending experts serve numerous cities in Burnaby, BC and help aspiring homeowners:
● Get pre-approved on mortgages so they have the much-needed flexibility to find the best deals on new homes.
● Get excellent mortgage renewal rates so you don’t end up paying more.
● Lockdown mortgage refinancing deals to lower your interest rates.
● Consolidate all your debts in single monthly payments.

Visit lendingexperts.ca to view all the services we offer in your city. You may also call to speak with us at 604-725-0657. We are here to help you get excellent interest rates on your dream home!