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Old 11-07-2013, 06:12 AM
 
472 posts, read 396,798 times
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Is there a 'inverse' relation between the stock market & the mortgage rates, ie., when the market is up the rates go down & vice-versa. Is this true or just a figment of my imagination? If its true, pls point me to an article that will explain this relation.

Alos, why isn't the 30-yr mortgage rates coming down even after the Fed now seems to backing out from its initial plan (atleast by Bernake's words) of slowing down QE. What's the market waiting on for this to happen?
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Old 11-07-2013, 06:59 AM
 
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Its much more complicated than that. You're looking for similarities in events that dictate the interest rate. If you look hard enough you will see some. If you test your theory and look for reasons why they have nothing to do with each other, you will also find proof.

You can prove either side of the argument. At the end of the day, we cannot predict the future.
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Old 11-07-2013, 07:15 AM
 
472 posts, read 396,798 times
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Can the 'complication' be elucidated?

On what factors/variables do the mortgage rates move? I just saw that the GPD went up & the initial jobless claims has dropped down. Now, this means the rates 've to go up today (more growth means more need of money). What other factors influence rates?
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Old 11-07-2013, 08:32 AM
 
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There is just too many variables, known and unknown. Its live, like market prices for seafood. At the end of the day, rates are the lowest they have been in 70 years. So what direction are they going to eventually go?

Up.

As interest rates have gone down, house prices have gone up. Eventually, when interest rates do go up, the housing prices will go down. It's always moving. In the end, the losers will be the people who bought at the peak of the housing prices at low interest rates.
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Old 11-07-2013, 11:46 AM
 
Location: MID ATLANTIC
7,598 posts, read 17,614,249 times
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Quote:
Originally Posted by ThisDamnLife View Post
Is there a 'inverse' relation between the stock market & the mortgage rates, ie., when the market is up the rates go down & vice-versa. Is this true or just a figment of my imagination? If its true, pls point me to an article that will explain this relation.

Alos, why isn't the 30-yr mortgage rates coming down even after the Fed now seems to backing out from its initial plan (atleast by Bernake's words) of slowing down QE. What's the market waiting on for this to happen?
You are not going crazy.....and the reason you notice it is because when Wall Street wins big, the bonds lose and visa versa. The other is typically seen as a flight to safety in a world gone wrong. See if you notice this on a daily basis or when there is a large gain or loss. Most days are typically boring with no rhyme or reason. I have a bond alert set on my computer.....earlier this year an alarm sounding rates moving fast would go off 2 and 3 times a day.......lately, it's been dead silence with the exception of a few days.

I do believe rates could slowly dip, if news persists to show a weak economy. But when Bernanke opened his mouth, rates were really low. I think he under-estimated the power of his own words. I think the rates are right where they want them. We have much on the horizon and a very uncertain market. Tomorrow is the mother of all figures, October's employment report. How much damage has been done from the shut down and Obamacare? Add this to the possibility that people are tightening their wallets and not spending again......too much going on to say anything with certainty.....but there's one thing everyone agrees on.....they will go back up as soon as we show signs of being on the mind.
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Old 11-07-2013, 02:04 PM
 
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The bond market used to be tied more directly to mortgage rates but fear, high-frequency trading, the market collapse resulted in a murkeying of everyone's crystal balls.

Mortgage-Backed Securities (MBS) are related to rates in this way:

If MBS are +10 bps (up ten Basis points, or .001%) for example, this means that pricing is improving or rates are trending lower. If MBS are -10 bps for example, this means that pricing is worsening or rates are trending higher.

Typically, it takes a negative movement of 20-25 bps for us to get a re-price for the worse. Conversely, it can take a positive movement of 25-30 bps or more to get a re-price for the better. Most all investors are quicker to worsen rates quicker than improve them.

Keep in mind also that you won’t see pricing improve or worsen by an amount identical to MBS movement. If MBS are +20 bps to start the day, you won’t necessarily see your loan pricing improve by exactly 20 bps. It works the same way if we are -20 bps to start the day.
MBS open trading at 7 am Central and close at 4:30 pm Central.
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Old 11-08-2013, 09:35 AM
 
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uh oh.. interest rates up 15 basis points today
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Old 11-09-2013, 01:48 PM
 
Location: MID ATLANTIC
7,598 posts, read 17,614,249 times
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No need to panic, just one day.......the fast climbs, almost always come back....it's the ones that go up a little bit over a sustained period are the ones that you have to worry about coming back. So, rates ran up before the 3 day weekend.....does anyone really thing the economy is improving so much to warrant higher rates at this time?

Deep breath.....
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Old 11-13-2013, 12:00 PM
 
2,721 posts, read 2,144,525 times
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Very rough answer, as there are tons of variables....but in today's environment....

Mortgage rates are driven by Fed rate, which influences all interest rates.

low rates drive borrowing (if lenders are lending), consumer spending, typically better company earnings, etc. which is why the stock market can be up with interest rates (mortgage rates) down.
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Old 11-13-2013, 01:00 PM
 
Location: Southern California
4,350 posts, read 4,929,984 times
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Policy and regulations will change to keep the flow of money moving, if you were to find a direct correlation now, it can easily be manipulated with a change in policy, regulations, guidelines, or taxes.

Mortgage rates and property values are part of the same conversation even if only one is mentioned. Some 5 year old threads have recently been bumped just to show that people can try to predict the future, just can't.

People though after a wave of 3/5/7 year ARM adjustments , people would be losing their homes today , well those rates are still somewhere in the 3% some people with out a 'floor' are under 3% on their ARM, and this is without a loan modification.

Our economy is based on inflation. It is up to policy makes to keep things inflating. Whether is be the price or the interest rate, something has to cost more in the future.
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