What’s Really Happening with Interest Rates?

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Filed under: Market Comentary

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I talked about interest rates last week, and figured it was worth a discussion again this week because of all of the current news around the topic. Last week, I talked about how the Fed dropped rates by a quarter, which brought up questions from people who thought it would have an impact on their mortgage rates.

Three Rates Discussed in the News

There are three different rates: two that get a lot of news but don’t really have an impact on your mortgage (The Fed funds rate and the US Treasury Bonds), and one that affects mortgage rates directly (Mortgage-Backed Securities). When people are buying Mortgage-Backed Securities, then it will drive mortgage interest rates up. On the other hand, when people are selling them, then it drives interest rates down. Most of the time, the buying and selling is done by large corporations.

If you are following the standard news channels, then the Fed funds rate and US Treasury Bonds are the ones that you will hear about most often, but they have minimal impact on your mortgage rates.

Mortgage Rates are Coming Down

The good news is that we are seeing mortgage rates come down. It’s been quite the ride, even in the last few weeks! The interesting thing is to see that the move with US Treasury yields have changed much more than what we’ve seen with mortgage interest rates.

Even though it doesn’t correlate directly, seeing the Treasury rates go down is usually a good indicator that mortgage rates are dropping as well. It’s been a historic move in the Treasury bonds recently. Mortgage rates have also been responding, but not as drastically.

Are You Thinking About Buying or Refinancing?

If you’ve been thinking about buying a home or refinancing your current mortgage, then right now is a great time to give us a call so that you can lock in the low-interest rates. We are at two-year lows right now. There is no way to predict what will happen tomorrow since much of it is based on geopolitical events. So, don’t delay a conversation to see if buying or refinancing is a good decision for your family so that you can get a low interest rate.

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