Mortgage rates are intricately tied to health of overall economy as well as consumer demand for home loans. Two of most important factors are activities of Federal Reserve Board and Fannie Mae. The Federal Reserve board sets interest rates for overall economy and this in turn affects type of mortgage rates that are offered to consumers. Fannie Mae buys your loan on secondary market and this frees up cash from mortgage lenders so they can offer additional loans to more people. This also has a major impact on type of mortgage rates that are offered to consumers.
Clean credit is best On an individual basis, nothing trumps good, clean credit. If you have excellent credit, or even good credit, you will find that mortgage rates that are being offered to you will always be at market rate or below market rate. The mortgage rate is what you pay for borrowing money.
If a bank or credit union thinks that your financial history shows that you might have some trouble paying back loan, then rate will be very high. A solid payment history and a clean credit report is best way to show them that you can handle this type of responsibility.