mobile alabama homes mobile al real estate library gulf shores alabama homes
gulf shores al real estate
fairhope al homes
daphne al homes














Mobile Alabama REMAX Agent

The Relationship of Mortgage Rates and Economic and Financial Market Events

Return to the Real Estate Library

Due to the fact that a mortgage loan is a long term debt, the Treasury bond market (debt issued by the federal government) is used as a benchmark for determining appropriate values of a mortgage loan.

The selling of mortgage loans to investors is referred to as the "secondary mortgage market". Mortgage loans are sold to these investors when a lender has loaned out all of its available funds. This secondary mortgage market must be competitive with similar investment markets in order to find investors.

Inflation is the primary factor that affects the Treasury bond markets and interest rate levels. Inflation also effects the value of investor's fixed return investments. Treasury bond investors do not like inflation because it diminishes the value of their fixed return investments.

The threat of inflation is subdued when the economy slows down. When inflation is lowered then investors become more comfortable investing in long term debt and the Treasury bond market rallies.

When the price of a Treasury bond moves higher on weak economic news an investor is forced to pay more for this investment.

When the bond moves higher the yield which is the return on investment to the investor declines. This decline causes the yield on all similar investments including mortgage loans sold in the secondary market to decline as well.

If a lender can sell mortgage loans at a lower interest rate to investors, the lender is likely to pass on these lower rates to you, the borrower.

orange beach al real estate

Lucinda Briggs
Re/Max By The Bay

Office
251-621-2588
Fax
 
251-625-3325
Cell/Text
 
251-423-7127

lucinda@lucindabriggs.com


real estate web design - realtor websites by imcd
copyright © 2011, all rights reserved
alabama relocation info
 
Property Search         Buyers         Sellers          Communities          Blog          Finance         About Me         Contact         Home
 
moving checklist
home Contact us about Alabama Gulf Coast real estate