Mortgage Rates Little-Helped by Market Turmoil

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Posted To: Mortgage Rate Watch

Mortgage rates did manage to move lower again today. And that move does bring them to the best levels in more than 3 months. But apart from that, the day was a bit of a let-down. Here's why. Mortgage rates are primarily dictated by the prices of Mortgage-Backed-Securities (MBS), a type of bond that's similar to US Treasuries in many ways. When economic data is bad or if financial markets are panicking, investors often buy bonds because they offer a safe haven relative to equities (stocks). More buyers result in higher prices and lower rates. It's not a 1:1 relationship, but over certain time frames, this is why we often see stocks and bond yields falling together. Investors are selling stocks and buying bonds (which makes yields fall). Since mid July, bonds (aka "rates") have already been improving...(read more)

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Source: http://www.mortgagenewsdaily.com/consumer_rates/504133.aspx

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