Understanding Mortgage Trends

Learn how mortgage rates and other factors influence the housing market

The ability of the average person to purchase a home is a fundamental element of the American dream. Therefore, since fluctuations in the housing market and the relative availability of mortgages affect the lending process, they tend to draw great interest from the would-be homebuyer.

But what causes the housing market to grow or contract? While there are many factors impacting mortgage trends, you might say there are three major elements at work: mortgage rate trends, supply and demand, and demography.

Mortgage rate trends and their impact on the mortgage market

The demand for mortgage-based investments by individuals and institutions determines mortgage interest rates. So, how the economy is performing can impact mortgage rate trends and the availability of home loans. If the economy is poor, we may experience a credit freeze, during which it's hard to qualify for loans but rates tend to be low. If the economy is doing well, loans can be easier to come by but rates may be higher.

How supply and demand and demography affect mortgage trends

While the housing market is influenced by the larger economy, it is also governed by the simple rules of supply and demand. It is especially affected during periods of demographic growth. This can be evidenced by looking at the last generation as millions of Baby Boomers started families and purchased homes. With so many potential homebuyers shopping around, prices tended to rise.

This change in demography also helped generate a building boom to meet the new demand. Conversely, when the number of available homes on the market outstrips the supply of willing buyers, prices usually drop, assuming other economic elements are constant.

Discuss mortgage trends with a trusted home loan advisor from Citizens Bank

We're here to help you navigate whatever mortgage rate trends happen to be impacting the market when you're searching for a home loan. You can also learn more about Citizens Bank's mortgage rates and start the mortgage application process online. If you need additional information, simply contact a home loan advisor at 1-888-514-2300.


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