Mortgage Rates
Mortgage rates are the interest rates charged on loans used to purchase residential property.
Meaning in Practice
Mortgage rates are influenced by central bank policy rates, bond yields, and credit risk conditions. They can be fixed or variable over the life of the loan. Lenders adjust rates based on funding costs and borrower credit profiles.
Why It Matters
Mortgage rates directly affect housing affordability and demand. Rising rates can slow property markets and construction activity. They are closely linked to household debt dynamics and financial stability.
Market Impact
Higher mortgage rates can reduce housing demand and weigh on construction and banking stocks. Falling rates often stimulate real estate activity and consumer spending. Bond markets influence mortgage pricing through yield movements.
Example
If the average 30-year mortgage rate rises from 3 percent to 5 percent, monthly loan payments increase significantly for new borrowers.