Ok…so on Monday, mortgage rates were up at the start of the day.
Then rates went down in the afternoon. On Tuesday, mortgage
rates went down three times during the day. On Wednesday,
rates went up twice. On Thursday, rates went down initially and
then they went up big time. What makes rates react like a Yoyo?
It really starts with the Mortgage Bond Security market. This is
the secondary market that buys and sells mortgage bonds. When
the market is open the price of mortgage bonds moves constantly,
just like the stock market.
In mid-morning the wholesale banks offer pricing to brokers in
one thousand increments between 1/8ths of a percentage point.
On a particularly volatile day, the banks may re-price their offers
to brokers two, three or even four times, up or down. That is why
you may get four different price quotes from the same broker
over the course of one day.
What moves the Mortgage Bond Security Market? Financial
reports, gut feelings, profit taking, risk aversion, fear, greed. All
of the same things that move the stock market.
What will rates be next Monday? They will be up or down, but
they probably won’t stay the same.
Posted by Terry Brunner. Terry is a Senior Loan Officer with Horizon
Financial. Terry can be reached toll free @ (877) 627-9211 x150 or
email TBrunner@HorizonFinancial.org. Visit Horizon’s website at www.horizonfinancial.org
