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The largest reason is term length. In general, borrowing money for longer terms is more expensive. If you could compare equal term lengths - compare a theoreti
by troydavis 4y ago
The largest reason is term length. In general, borrowing money for longer terms is more expensive.
If you could compare equal term lengths - compare a theoretical 1-day mortgage to a checking or savings account, or compare a 30-year bank CD to a 30-year mortgage - the rates/yields would be much closer.
- cbanek 4y agoThis, and also borrowing risk. It's more likely the a person will not pay the mortgage than a bank. More risk means higher rate to offset for the risk of default. But also, basically the banks can push you around because they have the money. The bank doesn't even have to give you the federal funds rate or the risk-free rate.