When mortgage lenders say aloud "the bond souk moved" so the rates are going to slide down, what does that aim?
Did the bond bazaar be in motion up or down, better or worse that cause the interest rates to jump down. Which bond souk is it, assuming within is more than one, that cause mortgage rates to turn down?
Answers:
There are two bond market surrounded by nonspecific that affect mortgage rates. The first is US administration bonds, which lend a hand establish a "credit risk free" let go (or rate).
The second is the mortgage bond souk. When you bring a mortgage, it is put into a pool of other similar mortgages. That pool is later sliced up and sold as bonds to investors. Those bonds trade in a bazaar of their own.
When you hear someone say-so "the bond marketplace moved" and rates are going Higher/lower, most probable they are referring to the US govt souk rates going up or down.
For the narrative, in attendance is not a 100% correlation between us govt bond rates and mortgage rates. Credit risk, housing bazaar risk, etc will sometimes trade name morgage rates move more or smaller number than the coppers surrounded by govt bonds. However, at hand is a positive correlation within nonspecific, which mechanism they will usually move surrounded by alike direction, though at varying amounts.
Interest rate change CAUSE prices change within bonds, not the other means of access around.
If Interest rates are UP, Bond prices down
If interest rates Down, Bond prices UP
There is no Bond open market that influences interest rates/mortgage rates.
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Answers:
There are two bond market surrounded by nonspecific that affect mortgage rates. The first is US administration bonds, which lend a hand establish a "credit risk free" let go (or rate).
The second is the mortgage bond souk. When you bring a mortgage, it is put into a pool of other similar mortgages. That pool is later sliced up and sold as bonds to investors. Those bonds trade in a bazaar of their own.
When you hear someone say-so "the bond marketplace moved" and rates are going Higher/lower, most probable they are referring to the US govt souk rates going up or down.
For the narrative, in attendance is not a 100% correlation between us govt bond rates and mortgage rates. Credit risk, housing bazaar risk, etc will sometimes trade name morgage rates move more or smaller number than the coppers surrounded by govt bonds. However, at hand is a positive correlation within nonspecific, which mechanism they will usually move surrounded by alike direction, though at varying amounts.
Interest rate change CAUSE prices change within bonds, not the other means of access around.
If Interest rates are UP, Bond prices down
If interest rates Down, Bond prices UP
There is no Bond open market that influences interest rates/mortgage rates.