A Question Often Asked after a Change to the 10 Year Treasury Rates

10 Year Treasury Rates or 30 Year Bond

Q: "I just heard that 10 year Treasury rates went down yesterday by ...  Does that lower my mortgage rate?"

A: "Although in most cases Mortgage rates and 10 year Treasury rates move the same direction, they do not move by the same amounts. An investor can lose money on a Mortgage if the loan/home goes into foreclosure. A Treasury note is backed by the United States government so it has no credit risk. This difference can cause the rates to go up and down at a different pace and, in some rare cases, actually move in different directions."

 

2 Comments on A Question Often Asked after a Change to the 10 Year Treasury Rates

I've heard that the 10 year Bond means absolutely nothing for mortgage rates anymore.

Everything is now based on MBS...Mortgage Backed Securirties.

But, I have no way to track the MBS...do you have a source to track it?

01/31/2008 11:00 AM by Michael Caruso Real Estate Group

Michael,
Rates are still coupled to 10 year Treasuries.  But not as tightly as they used to be.  Other factors like:

  • Financial Institution Profitability
  • Fulfillment Center's Capacity (are they full)
  • Perceived risk to Financial Institution based on current market conditions
  • etc.

All come into play to determine actual pricing.

Mortgage Backed Securities (MBS) are what how mortgages are bundled and sold to the secondary market.
AJ

01/31/2008 11:49 AM by Alan 'AJ' Nisen California Contra Costa Mortgage Officer (A Large Bank in America)

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Loan Officer: Alan 'AJ' Nisen California Contra Costa Mortgage Officer (A Large Bank in America)
Alan 'AJ' Nisen California Contra Costa Mortgage Officer
Lafayette, CA
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A Large Bank in America

Office Phone: (925) 688-3820
Cell Phone: (925) 963-5836
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AJ, as part of the Active Rain family, uses this forum to discuss issues that affect the Real Estate market, all aspects of Mortgages, Loans and refinancing, to build working relationships and friendships. AJ’s conversations include such topics as, the sub prime lending fallout, mortgage market changes, and localism (revitalizing downtowns, business growth, community volunteerism and events)



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