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Mortgage Rates Rise For The 7th Straight DayAuthor: Don Grimes | » Edit «
Mortgage Rates Rise For The 7th Straight Day  
Mortgage markets worsened for the 7th straight day Tuesday, equaling the longest losing streak of the last 5 years.
Conventional, 30-year fixed mortgage rates are now scratching 5 percent, with FHA mortgage rates running roughly the same.
This is a huge increase from just 11 weeks ago when mortgage rates were riding an 8-month-long hot streak, and appeared headed into the 3s. Then the Federal Reserve intervened.
On November 3, as additional support for markets, the Fed announced its second round of bond buys, a $600 billion program dubbed QEII - short for Quantitative Easing, Round II. Wall Street got spooked on the news; investors feared runaway inflation.
That's when low rates ended. Here's why:
(A) Inflation makes the U.S. dollar lose its value,
And, (B) U.S. mortgage bond payments are paid in U.S. dollars.
Therefore, (C) Inflation makes mortgage bond repayments lose their value.
When mortgage bond repayments are worth less, bond demand falls among the global investor set and that causes bond prices to fall along with it. When bond prices fall, mortgage rates rise and that's exactly what we're seeing right now.
Since the Fed's QEII announcement, mortgage rates have soared and ... more

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