mortgage rates

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• mortgage rates
• Published by
• rates4u

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• How Are Mortgage Rates Determined?
•  
• Most people have no idea how mortgage loan rates
  are calculated or what causes them to fluctuate,
  and those who believe they do are typically
  incorrect. As a former mortgage banker, I can
  tell you that a lot of individuals in the
  business couldn't even answer that question
  accurately. So, what's the deal with the mystery
  and misinformation? Let's take a quick look at
  what influences mortgage rates and (just as
  crucial) what doesn't.
• If you ask a group of friends what mortgage rates
  are based on, they will say they don't know, but
  it has something to do with Ben Bernanke and the
  Federal Reserve. Some of your more financially
  knowledgeable pals may tell you that interest
  rates are determined by the yield on a 10-year
  Treasury bond. Both of the responses are wrong.
  The reality is that mortgage rates are determined
  by the market for mortgage-backed securities
  (MBS). This is beginning to sound a little
  frightening. I'll try to keep things simple, so
  here's a short rundown of what a mortgage-backed
  securities is. Banks and mortgage lenders pool
  significant amounts of their mortgage loans in
  order to sell them as investments. Bonds are used
  to exchange these debt commitments (mortgage
  backed securities). An investor may put money
  into a pool of mortgage loans and earn money
  depending on how well they perform (do they pay
  on time etc...). The market for mortgage-backed
  securities is a subset of the bond market. The
  MBS market, like the broader bond market,
  responds and fluctuates in response to economic
  news and indications.Do you want to learn more?
  Visit current mortgage rates
• To take it a step further, for those of you who
  are familiar with financial issues, here is the
  technical explanation. Variances (or spreads)
  between MBS rates and a financial derivative
  product called interest rate swaps directly
  influence MBS rates, and therefore mortgage
  rates. Investors utilize these swaps to manage,
  hedge, or speculate on risk. A swap rate is a
  fixed interest rate received in return for the
  risk of paying the short-term LIBOR (London
  Interbank Offered Rate) rate over time. Mortgage
  rates are also affected by interest rate swaps
  and treasury notes' respective spreads.

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• So, why do so many people believe the Federal
  Reserve is in charge of mortgage rates? I'll take
  your estimate as good as mine. The most probable
  reason is that ignorant members of the media
  continue to report that the Fed has reduced
  interest rates and that mortgage rates would
  follow suit - and we continue to listen. The
  truth is that the Federal Reserve's activities do
  have an effect on mortgage rates, but it is
  indirect and often delayed. When the Federal
  Reserve announces a reduction in short-term
  interest rates, certain kinds of consumer loans,
  such as home equity loans and credit cards, are
  immediately affected. Have a look at best
  mortgage rates to get more info on this.
• It also has a detrimental impact on saving
  accounts such as money market accounts and
  certificates of deposit (because those rates go
  down as well). However, it has no immediate or
  direct effect on mortgage rates. The Fed's
  relaxing (dropping) short-term rates has an
  indirect effect on mortgage rates since it
  encourages investors to leave assets like money
  markets and CDs and put more money into the stock
  and bond markets. Bond prices increase when more
  individuals purchase bonds (including
  mortgage-backed securities). When the price of a
  bond rises, the yield on that bond falls.
  Mortgage-backed securities with lower yields have
  lower rates.
• This sequence of events, which began with the Fed
  cutting rates and concluded with mortgage rates
  falling, may take months to play out, and
  hundreds of other economic factors could
  interfere and prevent the chain from unfolding as
  expected.If you wish to learn more about this,
  visit lowest mortgage rates .
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• Summary
• Compare the best mortgage bank rates along with
  Canada's best mortgage rates, insurance quotes,
  and banking investment products with Rates4u.ca
• Visit this site to learn more
• https//www.rates4u.ca/best-mortgage-rates