Understanding the Correlation Between Mortgage Rates and Home Sale Numbers

A mortgage can be defined as a loan that is taken out from a bank, while using your own home as collateral. This means that if you are unable to pay your loan in time, the bank has the right to repossess your house in order to get the money back. Mortgage rates, therefore, refer to the interest rates of mortgage loans at that specific time period. Mortgage rates can fluctuate with the market, and are influenced by a variety of factors. Home sales numbers do seem like they are related to the mortgage rates. It has been shown that if mortgage rates increase, then the number of sales of homes decreases, and vice versa. However, this does not hold true – the sales of homes is not dependent on mortgage rates. Rather, it depends on the affordability of the house. Mortgage rates can influence this – if the mortgage rates are lower, it is easier to repay the loan, making the house more affordable. However, if the home is out of your price range, then the mortgage rate will not have much influence in your decision.

Affordability is determined by a variety of factors, mortgage rates being one of them. Most lenders or banks require a mortgage payment to be a debt income ratio of thirty two percent or less. This means that if the interest rate is lower, a person can qualify for a loan. However, if the interest rate is high, then you may not be able to qualify for the application for the loan.
Another factor that influences the affordability of homes is the down payment that is required to buy the home. If the down payment is a small amount, like three percent, then it becomes easier to be able to afford the house. However, if the down payment is twenty percent, then it becomes more expensive to buy the house, and you may not be able to pay such a large down payment.
One final factor that influences affordability is the home itself – and how much the home is worth. If the home is affordable, there will be a higher number of buyers interested in owning the house. If the home is fancy but expensive, there will not be as many buyers for the home. Remember that the property itself carries value, so ensure you know the value of the home you are looking for.

Best Mortgage Montreal is a brokerage team located in Quebec, and is uniquely serviced to be able to provide you with any and all mortgage guidance and advice. With a full team of experienced and qualified professionals, you can be sure that all your mortgage needs will be addressed, and that the brokers will be able to get you a good deal with a low interest rate. Furthermore, you can avail of mortgage calculations and pre-appraisals, free of charge, so you know the budget you will be working with while you look for a house, making it easier for you to find an affordable home.

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