Kelly Jennings - Senior Loan Officer NMLS 2003818
How interest rates work
Fed & Mortgage Rates
Wall Street & Mortgages
Wall Street & Mortgages
Mortgage rates aren’t set by the Federal Funds Rate.
They're determined by the current demand for MBS - Mortgage Backed Securities.
These are bonds that have a yield that paces Treasury notes.
Wall Street & Mortgages
Wall Street & Mortgages
Wall Street & Mortgages
Mortgage bonds are then traded on Wall Street. The rates you get depend on the market risk traders are willing to take.
Sell offs in the bond market can result in higher interest rates.
Next Steps in Your Loan
Wall Street & Mortgages
Next Steps in Your Loan
This process keeps the mortgage market fluid and able to continue to write mortgages.
If a bank had 100 million dollars, and the average home price was 400,000 dollars, they could only do 250 mortgages every 30 years...