Several personal financial factors contribute to the interest rate offered on a mortgage. One of the most important is the borrower's credit score. A strong credit score may indicate reliable financial behaviour, which can result in a more competitive rate. Lenders also evaluate the loan-to-value (LTV) ratio, which compares the loan amount to the property’s value. A lower LTV ratio is often seen as less risky, potentially leading to a better rate. The size of the down payment, the borrower's income stability, and the chosen loan term (such as 15 or 30 years) also influence the rate.

Beyond personal finances, broader economic conditions heavily affect mortgage interest rates. Central bank policies, such as changes to the cash rate, can directly impact lending rates across the market. Inflation trends, economic growth, and the performance of financial markets also play a role. Lenders adjust their rates based on these macroeconomic indicators to manage risk and maintain profitability. Additionally, the type of mortgage selected—whether fixed or variable—can change the rate structure. Fixed-rate loans offer certainty over time, while variable-rate loans may rise or fall depending on market shifts. Borrowers often weigh both personal and market factors when exploring mortgage options.