Buyer's Purchasing Power | Dwell Realty

Mortgage interest rates are one of the most important factors home buyers consider when they are shopping for a new house. These rates can fluctuate a lot over time, so it's important for buyers to understand how they work.

Here's a basic explanation: Mortgage interest rates are determined by the bond market. When investors are confident in the economy, they will invest in riskier assets like stocks. This drives up bond prices, because bonds are seen as a safer investment. When bond prices go up, interest rates go down. So, when the economy is strong, mortgage interest rates will be lower. When the economy is weak, mortgage interest rates will be higher.

The other thing to consider is that mortgage lenders make a profit on the difference between the interest rate they charge borrowers and the interest rate they pay to investors who buy their mortgages. So, when interest rates go up, lenders make more money on each loan. This is why you might see some lenders advertising very high interest rates during times when the economy is weak - they're trying to make up for lost profits elsewhere.

So what does all this mean for monthly mortgage payments? Here's a chart that shows how payments change with different interest rates:
As you can see, when mortgage rates are low, monthly payments are also low. And when mortgage rates are high, monthly payments are high. Buyers can take advantage of these fluctuations by locking in a low interest rate when it's available. This will ensure that they get the most house for their money.