Will terrorist attacks impact mortgage rates?
As I woke up this morning I saw the news regarding a fresh European attack in Belgium. Our thoughts and prayers are with all the victims (see an article on the event this morning) This horrific news also had impacts on global markets around the world and has led to fresh economic worries. What do these economic worries mean for Mortgage prices and the Fed’s upcoming moves?
Before delving into the impacts it is important to note what drives mortgage rates. Most people incorrectly think that the federal reserve “sets” mortgage rate. Unfortunately, this is an incorrect assumption that the federal reserve or any other entity can set the current mortgage rate.
So how are mortgage rates determined. Mortgage rates are market driven. Just today mortgage rates fell? Why did they fall if the federal reserve did nothing on rates?
Mortgage rates are based off the 10-year treasury and therefore market driven. External factors and perceptions can impact the 10 year treasury just as they did this morning with the flight to quality after the terrorist bombings. Just this morning bonds around the world increased in price and treasuries fell? Why do bond prices impact yields and therefore mortgage rates?
I wrote an article for the CO biz Magazine which discuss the events that impact treasuries, how treasury pricing works and in turn how yields are impacted. This is a must read for anyone in the real estate industry to truly understand how mortgage rates function and what drives their movements.
Written by Glen Weinberg, COO/ VP Fairview Commercial Lending. Glen has been published as an expert in hard money lending, real estate valuation, financing, and various other real estate topics in the Colorado Real Estate Journal, the CO Biz Magazine, The Denver Post, The Scotsman mortgage broker guide, Mortgage Professional America and various other national publications.
Fairview is a hard money lender specializing in private money loans / non-bank real estate loans in Georgia, Colorado, Illinois, and Florida. They are recognized in the industry as the leader in hard money lending with no upfront fees or any other games. Learn more about Hard Money Lending through our free Hard Money Guide. To get started on a loan all they need is their simple one page application (no upfront fees or other games).