About Kelly Jennings Home Loans
The Federal Reserve
The Federal Reserve
The Federal Reserve
Contrary to what many people are told, the Federal Funds Overnight Rate does not control mortgage rates.
It sets the standard for what banks charge each other which filters down to items like credit cards, auto loans, personal loans, etc.
However, mortgage rates are determined by completely different factors.
Wall Street
The Federal Reserve
The Federal Reserve
A mortgage is actually a bond traded on Wall Street. The official term is called Mortgage Backed Security (MBS).
Interest Rates offered to home buyers are determined by the risk appetite institutional traders on Wall Street are willing to offer for these bonds.
What Happens Next
The Federal Reserve
What Happens Next
Once a mortgage is completed, it is sold to an institutional investor where it is turned into a Mortgage Backed Security.
Large amounts of MBS's are purchased by hedge funds, retirement plans, and 401K providers as a way of having fixed investments that pay regular dividends.
This is what keeps the housing finance market liquid and allows m
Once a mortgage is completed, it is sold to an institutional investor where it is turned into a Mortgage Backed Security.
Large amounts of MBS's are purchased by hedge funds, retirement plans, and 401K providers as a way of having fixed investments that pay regular dividends.
This is what keeps the housing finance market liquid and allows mortgage companies to continue to fund mortgages for home buyers.