Question

examine the history of mortgages rate, prime rates or sone other commonly measured interest rates and analyze the pattern over time. explain the general trend in rate over tine and provide specific explanations for shorter intervals. crete a graph abd include a supporting table of data.

subject real estate Finance

Answer 1

The mortgage rate is the interest rate charged on mortgage . Mortgage rate can be fluctuating with interest rate or may be fixed at a interest rate.Home buyers who wish to finance the purchase of a new home with mortgage loans, first look into the mortgage rate.One of the indicators that home buyers will follow while considering a mortgage loan is the prime rate which is the lowest average rate banks give for credit.It is the interest rate that commercial banks charge from corporate  customers.The prime interest rate is determined by the federal funds rate which is the overnight rate charged by one bank to another. The mortgage interest rate is not influenced directly by the prime rate but indirecrly prime rate influences mortgage rate , more specifically adjustable rate mortgages.

Mortgage rates move up and down depending on the market . When the news is good, it is seen that stocks and mortgage rates move up but when the news is bad ,.stocks and mortgage rates move down.

The prime rate follows trend in the federal fund;s rate .and is usually 3% higher than federal funds rate.The higher the federal funds rate the higher the prime rate.The trend in mortgage rate from 1971 to 2019 show that there was a rise in motrgage rate but after that it has declined . Short term mortgage rates are higher than long term rates because in the long term it is spread over alonger period.In the short to medium term , adjustable rate mortgages can save a lot of money for borrowers.

The mortgage rate data from 1971 to 2019 show that there has been arise and then a decline in the mortgage rate in 2019. In 1971 it was 6%, in 1981 it was 16% but in 2019 it fell to 4%.