Anxiety in Equities Improves Mortgage Rates
July 8, 2009 · Posted in Latest Interest Rates
As I stated in yesterday’s blog, continued improvements in prices of mortgage backed securities (as price goes higher, rates go lower) will require further weakness in stock markets. If equity indices continue to move lower it would re-ignite investor';s inclination towards protecting their assets, also known as risk aversion. An increased appetite for risk averse assets would be beneficial for Treasury yields, which would then allow MBS prices to move higher, which would then afford lenders the opportunity to lower mortgage rates. See how interconnected the marketplace is?
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