A great deal of our home loans are financed through foreign investors. They own a lot of the securities issued by Fannie and Freddie Mac. This is why the US housing market effects the global markets. We saw this in 2008. Today, home prices have exceed the highs of the last crash so I wonder what's next to come. I really hope things don't turn out the way it did the last time around.
Our mortgage rates are tied to the US 10 year bond. Whenever the 10 year bond percentage goes up, mortgage rates will follow. For example, today's 10 year bond rate is at about 2.8% and the mortgage rates are at about 5% on a 30 year fixed for an applicant with high qualifications. The 10 year bond fell sharply to about 0.6% in April of 2020 (shortly after our 2 weeks lockdown); the mortgage rates then were as low as 2.5% on a 30 year fixed. This is incredible. I heard on the evening news the other day that the Fds are in talks to raise the rates by 200 basis points. Basis points is a percentage of a percent. 50 basis points equates to .50%; 100 basis points equates to 1%. If the rates are raised by 200 BP then this means the mortgage rates will go from about 5% to 7%. This is incredible.
Our mortgage rates are tied to the US 10 year bond. Whenever the 10 year bond percentage goes up, mortgage rates will follow. For example, today's 10 year bond rate is at about 2.8% and the mortgage rates are at about 5% on a 30 year fixed for an applicant with high qualifications. The 10 year bond fell sharply to about 0.6% in April of 2020 (shortly after our 2 weeks lockdown); the mortgage rates then were as low as 2.5% on a 30 year fixed. This is incredible. I heard on the evening news the other day that the Fds are in talks to raise the rates by 200 basis points. Basis points is a percentage of a percent. 50 basis points equates to .50%; 100 basis points equates to 1%. If the rates are raised by 200 BP then this means the mortgage rates will go from about 5% to 7%. This is incredible.