Rates Moved Higher Last Week, But Not Because of What You Think
Last week, mortgage rates rose for the second week in a row. They’re now measurably higher than the low point set 3 weeks ago. Don’t worry though, this isn’t permanent.
For mortgage rate shoppers, though, last week’s most important stories were not last week’s most reported stories. The most obvious of stories was the soon-to-be Treasury Secretary Tim Geithner’s suggestion that China may be manipulating its currency. Ouch.
What’s China Have To Do with It?
This suggestion poses risks to mortgage rates because China is one of the largest buyers of U.S. mortgage-backed bonds. Its ongoing bond buys helps keep mortgage rates down. If you make China angry, they are less likely to buy U.S.-backed debt and that would unfortunately pressure mortgage rates higher. China made their opinion of the Geithner’s remarks, they we’re angry.
In Other News…
Other mortgage rate-altering stories last week included:
- Corporate weakness at GE, Microsoft, and nearly every U.S. bank
- Concerns that political in-fighting could put off an important stimulus plan
- Job losses continue to grow in nearly every economic sector
Just to show how backwards markets are right now, in normal times, economic weakness often leads mortgage rates lower. In today’s market, however, it’s having the opposite effect. Whenever the economy looks sour, mortgage rates seem to rise.
Specifically, What Did Those Reports Say?
Each week, I put up an economic calendar of news coming out that following week. Here’s the what actually happened with those reports last week:
What Impacts Mortgage Rates?
If you’re looking to purchase or refinance a home, it’s important to know what moves mortgage rates. There are normally two major things that impact the direction:
- Economic News. (Like the calendar above).
- International News. (major events, pending legislation, war related news, etc).
- Stock Market. (Money flows from equities (stocks) to bonds when it seeks shelter).
What Are Rates Based On?
It’s been mentioned before, but as a common reminder – mortgage rates are only based on one thing. Mortgage Backed Securities (MBS). The only way you have access to these is through live bond quotes.
Looking For Mortgage Rates?
If you’re looking for specifically what mortgage rates are doing, I’d be happy to help with a custom rate quote. Each scenario is different (there are 27 different factors a mortgage rate is determined by). If you or someone you currently know are looking for a mortgage, I’m here to help!
Information without obligation. That’s my policy. If you like what you hear, my team would love to help!
(Image Kudos: USA Today)
