Boston condo interest rates. What causes interest rates to go up or down?

Boston condo interest rates

The world of Boston condo mortgage rates is indeed complicated. And the sudden rise and the fall in the rate of interest in mortgage loans have added more complexity to it. In fact it is because of extremely complicated series of relationships between several factors which determine the mortgage rate. The Fed, the market, the inter bank rate of interest and of course, people’s willingness to spend money, determine the rate of interest on a mortgage loan.

Understand the Market Boston condo market

Before delving into what determines mortgage rates, you need to understand the Boston condo market itself. First, keep in mind the point of view of both the lenders and the Boston condo buyers, mortgages are nothing but investments. If you are a Boston Seaport condo buyer, you view mortgages as investments. Again, from a lender’s point of view also, mortgages are investments. Suppose a lender provides a mortgage loan of $1M on your Boston Seaport condo at an annual simple rate of interest of 5% to a home buyer. Here the lender will receive an annual payment of $50,000.

Supply & Demand

Now, as long as there in only one lender in the market place, he/she can charge prettily high rate of interest. However, if there are many lenders in the market, offering mortgage loans, the rate of interest associated with mortgage loans will come down because of increased competition. If the rate of interest on mortgage loans goes to very low levels, buyers will look for other form of investments where chances are more to obtain better rate of interest.

Again, suppose a lender has certain amount of money. Now as the number of Boston downtown condo consumers who want to borrow the money rises, the lender can charge comparatively higher rate of interest. In other words, more Boston Midtown condo consumers imply higher rate of interest. Apart from these, these are many other factors which influence the mortgage rates which include the expected yield by the investors, number of investors in the market, number of dwelling buyers in the market and many other things.

Other Factors

Apart from these, of course, there are banks, lending institutions and the FED which are responsible for influencing the rate of interest on Boston condo mortgage loans. It is not the case that banks and the lending institutions sit together and do all the mathematical works themselves to calculate the interest rates on mortgage loans. Many a times, it has been seen that mortgage rates are pegged to some other rates. One such index is the interest rate associated with US Treasury bonds. Some times, the mortgage rates are kept slightly higher than the rate of interest on mortgage loans. Since the US Treasury bonds are secured whereas there are chances of default in case of mortgage loans, generally the rate of interest associated with mortgage loans are higher than the rate of interest on US Treasury bonds.

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Author Profile

John Ford
John Ford

Over the course of 20 years in the Boston downtown real estate market, John represented and sold numerous, condominiums, investment and development properties in Greater Boston and in the surrounding suburbs

In addition to representing Boston condo buyers and sellers, John is currently one of the most recognized Boston condo blog writers regarding Boston condominiums and residential real estate markets. John's insights and observations about the Boston condo market have been seen in a wide variety of the most established local & national media outlets including; Banker and Tradesman, Boston Magazine The Boston Globe, The Boston Herald and NewsWeek and Fortune magazine, among others.


For over 24 years, John Ford, of Ford Realty Inc., has been actively involved in the real estate industry. He started his career in commercial real estate with a national firm Spaulding & Slye and quickly realized that he had a passion for residential properties. In 1999, John entered the residential real estate market, and in 2000 John Started his own firm Ford Realty Inc. As a broker, his clients have come to love his fun, vivacious, and friendly attitude. He prides himself on bringing honesty and integrity to the entire home buying and selling process. In addition to helping buyers and sellers, he also works with rental clients. Whether you’re looking to purchase a new Boston condo or rent an apartment, you’ll quickly learn why John has a 97% closing rate.


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John Ford and his staff can be reached at 617-595-3712 or 617-720-5454. Please feel free to stop by John's Boston Beacon Hill office located at 137 Charles Street.

John Ford
Ford Realty Inc
137 Charles Street
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