Understanding Mortgage Rates | dripp inc | Home Equity | Refinancing and Remortgage Guide

Good Afternoon,

The recent events and news should have stirred a selling of bonds and an increase in mortgage rates, but this has not been happening, so the low interest rates have been holding!

Here’s the inside Dripp…

The revision of the Gross Domestic Product (GDP) came in much higher than expected and the weekly unemployment claims showed better results than expected. This has a stimulated a stock market rally, so naturally the bond market should suffer and rates should increase. The bond market has taken a hit, but not to the extent that is usually expected. Treasury prices are what have been taking most of the abuse, which lightens the affect on bonds. How long can bonds sustain? With the stock market rally we are currently seeing, I don’t think for very long. As I am typing, the Dow is up 179 points, NASDAQ is up 19 points and S&P is up 12.39 points. This rise puts pressure on bonds and mortgage interest rates.

Simply Put: We are experiencing another inconsistent day in regards to the reaction of mortgage rates and the stock market. Rates are still holding strong! A simple way of understanding the concept is like this: When the stock market improves, interest rates usually go up. You can stop right there and begin thinking about how to track the movement of interest rates on your own. You can check the movement on the stock market here. Now, this is not an exact science because there are many other factors that are associated with this. For example, although the stock market is strong right now and rates should go up, this is not happening because there are other indicators like bonds, treasuries and commodities working as well.

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