Quiz: Do you know how mortgage rates are determined?
by Staff
Are you in the market to buy a new home or refinance your current mortgage? You've probably noticed that mortgage rates seems to fluctuate significantly, but do you know how they're set? Take our quiz to see if you know the science behind the seemingly random method of determining mortgage rates.

What factors have the greatest impact on the interest rates charged for mortgage loans?

  • stock market performance and foreign exchange rates
  • prices for gold, silver and oil
  • inflation, U.S. treasuries price and the Federal Reserve

What is typically the first major financial decision a teenager makes?

  • whether to apply for student loans
  • whether to get a summer job
  • whether to buy a car

When you take out a mortgage, are you assuming all the risk?

  • yes
  • no
  • only if you don't have a co-signer
  • the percentage of your down payment for the home
  • the amount of risk the bank is taking on you and the economy
  • the most money the bank can get without bankrupting you

In the U.S., what usually happens with your new mortgage after your lender gives you the loan?

  • Your mortgage payments are used to pay depositors and to generate profit.
  • It causes your credit to be frozen for six month.
  • Your mortgage is sold to a third party.

What does an aggregator do?

  • auctions off bank-owned properties
  • packages mortgages together into a mortgage-backed security
  • repossesses homes from people in default on their mortgage

What are shares in a mortgage-backed security called?

  • splits
  • divided holdings
  • tranches

When comparing rate of return, what U.S. treasuries item does an investor compare to the interest rate on a 30-year fixed mortgage?

  • 10-year bond
  • 20-year bond
  • 30-year bond

What happens to mortgage interest rates when economists predict a rise in inflation?

  • They tend to remain stable.
  • They tend to increase.
  • They tend to decrease.

How does the Federal Reserve influence the federal funds rate charged by banks for overnight loans?

  • by selling or purchasing bonds and foreign currency
  • by selling or purchasing gold
  • both of the above