Here’s a Short and Sweet Recap of Last Week’s Mortgage Rate Movement
Often when the stock market bites the dust, mortgage rates improve. The basic explaination is money moves from equities (stocks) to bonds (specifically, mortgage backed securties in this case). The higher the value of a mortgage backed security, the lower the interest rate. Make sense?
The stock market had a rough week last week closing below 12,000. Mortgage rates overall improved roughly .125%.
Another interesting component of mortgage rates is how traders interpret economic news. If the news is strong, rates often deteriorate. If the news is ugly, rates improve. Last week we had a series of weak economic news. We had weak housing numbers, weak manufacturing sector news and more write-downs from Citigroup. Again, causing money to fly out of stocks and seeking safety in bonds.
If you want to keep updated on where rates are moving day to day, feel free to follow me on Twitter. It’s a bit of an addiction for me, but I communicate what the market’s doing throughout the day and try to take some of the mystery out of where mortgage rates are headed.
Most Americans think that mortgage rates are simply controlled by the lenders and there’s no way to determine what they’ll be doing. Truth is, if you’re working with a mortgage professional that understands the mortgage market and what rates are directly connected with, you can lock your interest rate at the right time and not get burned by a re-price for the worse or even worse, an improving bond market!
