Understanding How Mortgage Interest Rates Can Change


Mortgage interest rates can change everyday and sometimes they can change once or twice during the day.   Mortgage backed securities are traded daily on the Chicago Board of Trade.  Changes in the mortgage backed securities market dictate the changes in mortgage interest rates charged to consumers. 


When mortgage backed securities are traded they move in accordance with various economic developments.    The stock market has a dynamic relationship with the mortgage backed securities market.  Typically it is an inverse relationship.   When stock prices are rallying (or up), usually the mortgage backed securities market is down and rates rise and vice versa. 


There are a number of items that affect the stock market and mortgage backed securities market.  On a weekly and monthly basis we receive economic data that we know will have an impact on the stock and mortgage backed securities market.  The important reports that we assess and analyze are as follows:


  • Consumer Confidence
  • Consumer Price Index (CPI)
  • Employment Report
  • Federal Open Market Committee Meeting and Minutes
  • Gross Domestic Product
  • Existing Home Sales and Housing Starts
  • Producer Price Index
  • Unemployment Rate


In addition to these and other reports, the markets are also impacted from other factors including comments from the Federal Reserve, corporate profits and accounting scandals, rising fuel prices, natural disasters, terrorist attacks and the markets being overbought or oversold. 


As you can see there are many factors that can have an impact on mortgage rates.  Professional Choice Mortgage invests in the resources that provide daily market commentary  on the latest breaking news and information that is impacting mortgage rates including lock and float recommendations by leading industry analysts.  We receive live mortgage backed security bond quotes every two minutes, so that we stay in tune with market and can tell if lenders will re-price during the day. 


In all we understand the factors that affect rates and can see changes coming as they unfold, not after the fact. 

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