Which factors are affected by mortgage financing?

Mortgage financing significantly impacts both equity dividends and equity yields from real estate. When considering equity dividends, these represent cash flows generated from a property, such as rental income, which can be influenced by the terms of the mortgage. Lower interest rates associated with favorable mortgage financing can enhance cash flow by reducing monthly payments, thereby increasing the potential for higher dividends.

Similarly, equity yields, which measure the return on investment based on the equity invested in a property, are also influenced by mortgage financing. The leverage provided by a mortgage allows investors to control more property than they could with purely their own capital. This can amplify yields, especially in a rising market. With a smaller equity investment, if property values increase, the overall return on that equity is magnified due to the proportionate increase in the asset's value against the initial investment.

Thus, when mortgage financing conditions change (like interest rates or loan terms), they create direct changes in both the equity dividends received from rental activities and the equity yields calculated based on appreciation and overall investment performance. This interrelation underscores the importance of understanding how mortgage financing can affect both components of real estate investment returns.