How can that be when the Federal Reserve Bank lowered interest rates?
It is a good time to reflect on what drives mortgage rates. Mortgage Backed Securities are the key to mortgage interest rates. Obviously the rates are affected by many different factors and this last week despite the lowering of interest rates, the stock market rose dramatically and long term bonds (10 year) were not garnering the interest they had. The dollar dropped significantly against other foreign currencies, oil prices rose and suddenly mortgage backed securities are not as attractive an investment so interest rates rose to counter this.
Robyn Robertson
Suburban Mortgage Inc.
Phone 480 355 8106
Cell 480 415 2336
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1 Arizona Mortgage Guru » Blog Archive » Mortgage Rates Not Related to the Federal Funds Rate // Sep 25, 2007 at 3:36 pm
[…] Welcome to the Arizona Mortgage Guru blog, a great resource for all your home financing needs. If you’re new here and like the content, you can subscribe to my RSS feed to get regular updates on all things related to mortgages. Thanks for visiting.There is a lot of confusion regarding interest rates. I received a few e-mails and some phone calls asking if it was now a good time to buy real estate since the Fed cut interest rates. I replied that the Fed rate doesn’t affect home mortgage rates. The two are completely different animals. In fact this week home mortgage rates went up after last weeks rate cut. […]
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