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Mortgage Rates Down Only Slightly Despite Bond Market Rally

What’s a bond market rally and why should mortgage rates care?  There are all kinds of bonds.  US Treasuries would be the quintessential example, but there are also bonds specific to the mortgage market.  These are what groups of loans ultimately become in order to be traded on the open market (thus allowing lenders to make more loans with less risk and lower rates).  As investors buy and sell bonds throughout the day, bond prices change.  The higher the price, the lower the implied interest rate.  Simply put, if bonds are rallying, rates should be falling shortly thereafter.
The 10yr Treasury yield is typically an excellent barometer for mortgage rate movement.  10yr Treasuries and mortgage-backed bonds tend to correlate extremely well.  As such, we might expect a more significant improvement in mortgage rates on a day where 10yr Treasury yields fell by more than 0.05%.  As it stands, the average mortgage rate is, at best, 0.02% lower (and in many cases, unchanged)….(read more)Forward this article via email:  Send a copy of this story to someone you know that may want to read it.
Source: mortgagenewsdaily.comNew feed

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