Which factor typically leads to a higher mortgage interest rate?

A low credit score is a significant factor that can lead to a higher mortgage interest rate. Lenders view credit scores as a crucial indication of a borrower's creditworthiness and risk potential. A low credit score suggests a history of missed payments, high debt, or other financial issues, which increases the lender's risk. Consequently, lenders often charge higher interest rates to compensate for this perceived risk, meaning that borrowers with lower credit scores can expect to pay more for the privilege of borrowing money.

In contrast, a higher income typically indicates the ability to repay loans, potentially leading to more favorable interest rates. Similarly, high property values can be positively correlated with lower rates, as high-value properties may signify lower overall risk. Shorter loan terms, on the other hand, typically result in lower interest rates because the lender's risk is reduced over a shorter period. Thus, among these factors, a low credit score stands out as the primary driver of higher mortgage interest rates.