The Mortgage rate is the single most important factor considered by potential homeowners looking to purchase a new property. The rate determines how much and how quickly a person must repay bank loans. But what make mortgage rates rise or fall? Is it the Fed? The economy? Inflation? The banks? The President? Fannie Mae or Freddie Mac? Funding for mortgages can come from many sources, commonly from deposits at banks and brokerages, but typically comes from investors through “capital markets.” These markets are where investors interested in purchasing bonds come to purchase them.

In order for investors to be interested in lending their money, they must be attracted by high interest rates that will yield large returns when the loan is paid back to them. However, in the tightening economy, not only are lenders keeping more money for themselves, they are also turned off by the low return for what can be deemed a considerably higher risk. Unless the interests rates return to their former high rates or the market conditions make lending less riskier, mortgage woes will continue to plague the United States. However, for people with money to invest in real estate, this is the perfect time to snatch prime properties for fractions of the cost.

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