After spending the first four months of the year bouncing around between 4.75% and 5.00%, the par 30 year fixed conventional mortgage rate finally fell to new 2010 lows this week. Although there were a few moments of volatility, mortgage rates generally rallied thanks to a flight to safety investor bias. A flight to safety happens when investors are nervous about owning risky assets like stocks, but do not want to miss out on earning a return on their funds, so they allocate money into risk-free U.S Treasury debt to provide a safe-haven AND an investment return. To remind readers, as benchmark Treasury yields fall, prices of mortgage-backed securities move higher, which allows lenders to offer lower mortgage rates. As Treasury yields rise, mortgage-backed security prices are led lower, which…(read more)
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