How Interest Rates Affect the Housing Market

Mortgages come in two primary forms, fixed rate and adjustable rate, with some hybrid combinations and multiple derivatives of each. A basic understanding of interest rates and the economic influences that determine the future course of interest rates can help consumers make financially sound mortgage decisions, such as making the choice between a fixed-rate mortgage or adjustable-rate mortgage (ARM) or deciding whether to refinance out of an adjustable-rate mortgage.

In this article, we'll discuss the influence of interest rates on the mortgage industry, and how both will ultimately affect the amount you pay for your home.

The Mortgage Production Line

The mortgage industry has three primary parts or businesses: the mortgage originator, the aggregator and the investor.


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