Bank Rate Adjustment

• Banks base the interest rate at which they are willing to offer mortgages based on the prevailing interest rates offered by other lenders. These interest rates are measured using indexes that calculate the average interest rate offered by a number of borrowers. As these indexes shift, so do the mortgage rates offered by a bank. Depending on a bank's policies, it may adjust the mortgage rate it offers prospective borrowers every day or even every hour.
  
  

Interest Rate Fluctuation

• The interest rates to which banks peg their mortgage rates are controlled by a number of factors, the foremost of which is the relative supply and demand of loans. If the number of loans available at a certain rate of interest exceeds the number of borrowers, the rate will fall. Conversely, if the number of borrowers exceeds the number of lenders, the rate will rise. A country's central bank, through manipulation of the currency, will also have a hand in controlling interest rates.
  
  

Bank Policies

• Each bank has a different set of policies it uses to determine to whom it will issue loans and at what rates. Sometimes a bank will adjust these policies, adjusting the rates offered to prospective borrowers. There is not set amount of time for which a bank will maintain its policies. Some banks will readjust policies frequently, while others will do so only rarely. In the wake of the subprime mortgage crisis of 2008, many banks adjusted their lending policies.
  
  

Credit History

• A bank will also adjust mortgage rates offered to a borrower depending on changes in the borrower's credit score or financial status. For example, if a borrower's credit score goes up or his income increases, the bank may be willing to offer a lower interest rate. Credit reporting companies update a person's credit score frequently -- every time new information is reported to them by lenders and other financial institutions.