Many were afraid that when the Federal Reserve increased interest rates, the mortgage rates would also go up. However, as previously reported, mortgage rates will or can move on their own, with or without the rate changes dictated by the Federal Reserve because mortgage rates are affected by many factors and the rate increase is only one of them. Therefore, rise in interest rates may not automatically mean an increase in mortgage rate.
In a report published on The Washington Post, it was discussed that changes with the 10-year Treasury is one of the best signs of whether mortgage rates will rise or fall. And in the latest data from Freddie Mac, the 30-year fixed-rate average fell for the third time this week in a row. Thus mortgage rates dropped as well and with the drop, many homeowners sought to refinance mortgages to take advantage of the lower rates.
In another news, more and more investors have turned government bonds and with a high demand for bonds, the yields have dropped causing the yield on the benchmark 10-year Treasury note to sink further to lower than 2 percent. According to Fox Business, with low demand on stocks, prices fell, yields on bond fell as demand increased and these are good news to homebuyers.
According to Mortgage Broker Francine Silberman DiSesa, president of Asset Center Mortgage in Armonk, New York, "When there's stock market instability, sometimes bond rates are better. By and large, the perception is that ... bond activities are the greatest influence on mortgage rates."
On the other hand, Home Purchase Sentiment Index survey results from Fannie Mae reflects how consumers can be so wrong when predicting about the rates. There are many consumers who believe that the mortgage rates have hit rock bottom and not poised to skyrocket.
