Generally speaking, when it comes to a conventional mortgage, a given bank offers loans at the same interest rate for everyone. As long as your qualifications allow you to pass a certain threshold to qualify for the mortgage, you pay the same interest as everyone else who surpasses that threshold and obtains the same loan at the same time as you.
This means that someone with, say, an OK but not amazing credit score will pay the same interest as someone with a superlative score and credit history, as long as they both meet the requirements to qualify for the loan.
I'm curious about whether there is a specific reason why banks do this. Couldn't they instead tailor interest rates based on applicants' specific and individual qualifications, so that people who are extremely low risk pay lower interest than people who have good but not excellent credit, or have bad debt-to-asset ratios?
I realize that different banks offer different rates for the same mortgage, and that rates fluctuate all the time. I'm not suggesting that everyone who qualifies for a mortgage pays the same interest rate; they obviously don't. I'm instead interested in understanding why, if two people apply for a mortgage at the same bank at the same time and both are approved, they each pay the same interest rate even though one applicant might be higher risk than the other.