Mortgage Rates

When looking for a mortgage rates, it’s essential to understand the different products that are available so you can be sure you get the right one for you. Lenders offer different interest rate options and this will affect your monthly payments. So choosing the right deal could save you money.

A convertible fixed rate mortgage offers buyers the option to adjust the rate of the loan between the second and the fifth year of the term by adding an extra quarter to three-eighths of a percent to the mortgage’s established interest rate and paying an additional quarter to three-eighths of a percentage point at the time of closing.

Mortgage rates are influenced by the official interest rate or Target Cash Rate as set by the Reserve Bank. When the Reserve Bank changes the official rate and in turn, mortgage rates, it is attempting to influence expenditure in the economy. When expenditure exceeds production, inflation results. Therefore mortgage rates are used as a tool to control inflation as a part of monetary policy.

Some mortgage companies will allow you to lock in a lower interest rate once you have already committed to working with them. You should not automatically expect your mortgage rate and payment to go up in a few years. Stick with a fixed rate mortgage and you will not only save money, but you will also be able to plan for your budget long-term.

Read more about no cost refi and refinancing home mortgages.