Mortgage Rates Still Stuck Near Summer Lows
Mortgage Rates are still holding steady near summer lows after prices of mortgage backed securities rallied to summer highs yesterday. While the appreciations in the secondary mortgage market were quite noticeable and lenders republished rate sheets for the better, we had a late day slip up which resulted in a few lenders taking back the reprices for the better. All in all mortgage rate status quo was maintained. To remind readers, the process of generating mortgage rates begins with trading in the secondary mortgage market. When the price of mortgage backed securities rises, lenders are able to sell loans for higher prices. These gains eventually trickle down to consumers in the form of lower mortgage rates. When prices of mortgage backed securities fall, lenders must sell their loans for less, which increases mortgage rates. MBS are similar to US Treasuries in that the price of the security has an inverse relationship to the yield, price goes up, yield goes down and vice versa.
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