December 21, 2021

Federal Reserve Doesn't Control Mortgage Rates

Financial pundits like to talk about what the Federal Reserve is up to. If you have seen recent news stories about “The Fed” raising interest rates in early 2022, you may have also heard speculation about rising mortgage rates.

While mortgage rates can be influenced by changes in the federal prime rate, it’s important to remember that the Federal Reserve doesn’t actually set your mortgage rate.

All banks and lenders use risk-based pricing models to determine the final interest rate of a loan. There are about 30 risk factors considered and no rate quote is final until all factors have been evaluated. A loan officer who hasn’t reviewed your credit report or income documentation has no idea what rate can be offered.

30 Factors That Influence Your Mortgage Interest Rate

  1. Loan Amount

  2. Loan Term

  3. Loan Purpose

  4. LTV (Loan to Value)

  5. Property State

  6. Property Type

  7. Occupancy

  8. Credit History

  9. Asset Verification

  10. Relocation

  11. Concessions

  12. Employment Status

  13. Co-Borrower

  14. Lock Period

  15. Underwriting System

  16. Loan Type

  17. Amortization

  18. Cash Out Amount

  19. CLTV (Combine Loan to Value)

  20. Property County

  21. Number of Units

  22. Credit Score

  23. Debt Tolerance Ratio

  24. Reserves

  25. Gift Funds

  26. Income Verification

  27. Employment Info

  28. Citizenship

  29. Mortgage Insurance

  30. Inclusion or exclusion of escrow

The mortgage process can be complicated, and the lowest rate might not be the best loan for you. That’s why it’s important to work with a quality lender like Boles Group lending team at Bay Equity Home Loans. They will put the time in to understand your financial history, your short- and long-term goals, and to make sure your mortgage truly meets your individual needs.


Bay Equity Home Loans – Boles Group is a team of lending professionals located in Gilbert, Arizona and licensed to originate home loans for purchase or refinance in 11 states (AZ, CA, CO, Fl, GA,HI, ID, MN, NM, NV, OK, OR, WA). Boles Group lending professionals have the knowledge and experience to create solutions where other lenders create problems. The team prides itself on responsive, accurate communication and is highly regarded by clients and business associates alike.