Which factor is critical in determining the interest rate offered on a mortgage?

The borrower's credit score plays a pivotal role in determining the interest rate offered on a mortgage. Lenders use the credit score as a measure of the borrower's creditworthiness and likelihood of repaying the loan. A higher credit score indicates a history of responsible credit usage, timely payments, and lower risk, which typically translates into a lower interest rate. Conversely, a lower credit score suggests a higher risk for the lender, often resulting in a higher interest rate to compensate for that risk.

While the type of property, loan amount, and length of the mortgage term are also important considerations in the mortgage approval process, they do not have the same direct impact on the interest rate as the borrower’s credit score. The type of property may affect the lender's risk assessment, and certain property types may have different rates, but it is the borrower's creditworthiness that is primarily evaluated through the credit score. The loan amount and mortgage term can influence overall loan costs and monthly payments, but they do not inherently dictate the basis for the interest rate as decisively as the credit score does.