mortgage interest rates?

[uncle J]

I noticed that after the Fed lowered their interest rates a few weeks ago mortgage rates actually went up slightly. What happened?

[Harley Lady]

Yes, it is sad..owning your own home used to be the American dream, but with high property taxes,homeowner insurance, etc,more people than ever are losing their homes through foreclosure. I think that is why banks and other lenders have to keep their rates higher.

[Tom L]

This can be a complicated question to answer in detail...to keep it simple this is what happened. When the fed lowers interest rates it makes the US dollar worth less worldwide and can lead to infationary pressure on the band market. Fixed mortgage rates are ONLY affected by mortgage bonds (aka mortgage backed securities), not the t-bill. So, in a nutshell when the fed lowers rates a mortgage bond (or any bond for that matter) potentially has the risk of losing value over time. This causes investors to get out of the bond market and back into the stock market... which causes more supply than demand for bonds...which lowers the price/value of bonds...which makes rates go up. The mortgage rate/ mortgage bond relationship works in this manner: When the price of mortgage bonds go up, fixed mortgage rates decrease; and vice versa.The overall economy plays a big role in mortgage rates. The bonds are sold on the open market and are affected by ecomic news just as much as stocks are.