We all have heard the financial media presenting information on the bond markets continually make erroneous assumptions about the relationship of mortgage interest rates with US Treasury Bond and Note prices.  This happens because these financial reporters may understand the bond markets in general, but they are not mortgage experts and do not fully understand how mortgage interest rates are determined.  For example, the bond market reporters mistakenly tie mortgage rates to the performance of the US 10-year Treasury Note on a routine basis.  You see this happen all the time.  In reality, mortgage interest rates are determined from the performance of mortgage-backed securities or mortgage bonds not US 10-year Treasury Notes.

These trading desks are the mortgage backed securities being sold to Fannie Mae and what their buy price is at that moment.  Although the 10-year treasury has similar trends, the daily comparison will show quite a variance.  Using the more accurate readings which I watch and report on daily give you a real advantage and edge over those who use the 10-year Treasury note as interest rate guides.

Using the correct reading of the mortgage market will provide a definite advantage and basically the correct information.  My belief is I need every edge I  can get to provide significant advantages for my clients.  

I have been in the business for over 20 years and for 14 of those years I thought interest rates were always tied to the Treasury notes.   Well so much for that.  I am very thankful that I was able to more fully understand this so I can be of better assistance to my clients.  I sincerely hope that you work me or a professional that does understand this important distinction. 

Now I make recommendations on interest rates trends and follow through.  This reduces the stress and helps to make better decisions that effect long run outcomes.  Reducing the stress and making better decisions isn't that what we are all looking for?  

Thank you for reading and we will continue to bring you new and fresh information on this website. 

Roger Herrick

http://www.contactherrick.com/

California Mortgage Broker