My Mind on Mortgages

In a more normal financial environment we expect that when stocks trade lower mortgage rates benefit.  This is because when money flows out of stocks it typically finds its way into the bond market which helps drive yields lower. However, on many occasions over the past two weeks we’ve seen both stocks and bonds sell-off [...]

How important do the markets think the financial bailout is? On news that the $700 billion financial rescue plan got voted down in the House of Representatives th Dow Jones Industrial Average fell by almost 800 points. To put that in perspective, when the markets opened following September 11th the Dow Jones dropped 644 points.

  Mortgage rates are up across the board today.  We shifted our outlook to a locking position on Friday and our shift proved timely. We alluded to technical trading patterns on Friday as a reason to lock and mortgage-backed bonds have now broken below the 100-day moving average which is partially why rates have moved [...]

Mortgage rates are modestly lower today as mortgage-backed bonds trade inversely with the stock market. Mortgage rates are benefiting from a “flight-to-quality” which I explain in today’s you tube video which can be viewed here- Later this week the Personal Consumption Expenditure (PCE) report is scheduled to be released which is an extremely important piece [...]

Although inflation expectations are the primary factor that influence the direction of mortgage rates on a day-to-day basis the stock market can also have an impact. To understand how this relationship works it’s first important to understand how mortgage rates are determined. Mortgage rates are entirely determined by the price of mortgage-backed bonds (MBS’s). MBS’s [...]