Oct 9 2017 19903 1

Oct 9 2017 19903 1

WHAT ARE MORTGAGE RATES BASED ON?

Mortgage rates are based onmortgage bondsormortgage-backed securities (MBS). MBS are the cause of mortgage rate change. The 10 year T-bill is also an indicator. But many bond market and financial reporters mistakenly tie mortgage rates to the performance of the 10-year T-Bill.

The Fed Lowered Rates -- Why Aren't Rates Going Down?

The Fed lowers the short-term discount rate to stimulate consumer spending on short-term credit, which affects credit card rates, some car loans and lines of credit.

The market can move faster than you may expect. When investors spot a short-term stimulus, they tend to bail out of the safe haven of bonds and/or mortgage backed securities and move those dollars into stocks. This typically causes a rally in the stock market and a sell-off of mortgage backed securities, both of which cause interest ratesto go up. Conversely, stock market scares will cause a move to safety in the safe haven of bonds and then interest rates will go down.

This is a global economy and many, many factors are at play. Thus it is very complicated trying to predict the rate direction.

The Realities of Fed Rate Cuts

If the Fed cuts the rates, rates go up, down, or stay the same. Fed rate cuts are used to   stimulate a slow moving economy, often resulting in an upward movement for interest rates. Oft times, the move has already been calculated into the market and it could stay the same and if the market remains sluggish rates can trend downward. The opposite is also used by raising the rates in an attempt to slow down inflation.


Wayne Ross Headshot
Author:
Phone: 561-308-8300
Dated: October 9th 2017
Views: 133
About Wayne: ...

Property Search








RSS Feed

View our latest blog posts in your RSS reader. Click here to access. RSS

Search Blog

Recent Blogs

Florida Gov Rick Scott Issues Order To Protect Beach Access - Scott issues order to protect
Jul 18 2018 59190 1 - 4 Real Reasons we buy a home.1
Want To Sell Your House Faster Staging Makes All The Difference - Click the link below to see how
Jul 16 2018 59190 1 - Foreign buyers are here in the

Saved Properties

This is a list of your favorite properties. We will email you if a property is reduced or leaves the market.

Click 'Save' to add a property to this list.

Register / Login

New & returning visitors please enter your information to login.

By clicking 'register' you are agreeing to our terms of use & giving us expressed written consent to contact you.

Questions? Comments? Complaints?

This message will go directly to the head of our team.

Location & Address

Exit Realty Premier Elite
8961 Hypoluxo Road
Lake Worth, FL
561-701-8124


Other Locations